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Scottish commercial property investment up a third

Investment in Scottish commercial property increased by more than one-third (35%) compared to the same period last year during the first six months of 2021 as the market continued its recovery from the pandemic, according to analysis from Knight Frank.

The independent commercial property consultancy found there were £688 million worth of deals between January and June 2021, compared to £510 million during the first half of 2020 – the height of the UK’s first lockdown.

Investment fell marginally between the first and second quarters of 2021, from £371 million to £317 million (15%). However, this does not include deals with undisclosed values, such as the sale of Neptune Energy’s Aberdeen headquarters in May – the biggest investment deal in the city since the pandemic began.

Overseas investors have remained the biggest buyers of Scottish commercial property so far in 2021, making acquisitions totalling more than £300 million. Privately held property companies were involved in £115 million of deals, while UK institutions accounted for another £60 million.

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Alternatives and mixed-use schemes were the most popular asset classes in terms of investment volumes – including the £80 million of funding for Moda’s Holland Park build-to-rent development in Glasgow – followed by offices and industrials. Knight Frank predicted that, with a range of high-quality stock still being marketed, a flurry of deals could complete after the summer.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “Scotland’s commercial property investment market is still recovering from the effects of the pandemic, but there are signs we are heading in the right direction as the economy re-opens. The biggest investment transaction in Aberdeen since the pandemic began is indicative of the fact that significant deals are beginning to conclude and, all things being equal, we should see more after the summer break.

“While alternatives and mixed-use schemes has been an active sector over the past year or so – particularly in the build-to-rent market – another notable trend has been the hardening of yields for retail warehousing. With more investors looking for exposure to these assets, we expect the trend for good quality retail warehousing to continue, while offices should gain momentum in the second half of the year as the occupier market recovers and overseas inspections are allowed once again.

“There is a great deal of interest in what Scotland has to offer, with comparatively strong fundamentals. Commercial property remains an attractive source of secure long-term income, which is still a precious commodity for investors.”

By Brian Donnelly

Source: Herald Scotland

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Commercial property market growth prediction

The commercial property market could see returns grow by 6.4 per cent in 2021, real estate firm Colliers predicts.

The growth would be made up of 4.8% income return and 1.6% capital growth.

This follows a 2.3% decline in all property total returns in 2020. The firm says industrial and supermarket assets will be the most popular with investors in its latest Real Estate Investment Forecasts report.

Oliver Kolodseike, deputy chief economist at Colliers, said: “Latest business and consumer confidence survey data suggest that the economy will bounce back strongly in Q2. This is heightened by consumer confidence rising to its highest level since before the start of the pandemic, adding to hopes that the consumer sector will help drive the economic recovery.

“Mild rental growth will result in a slight reduction in yields in the short term, but we expect yields to then generally shift out in line with the trends for the Bank of England Bank Rate and 10-year government bond yields.”

Colliers predicts that over the five-year forecast, industrial and supermarkets will be the best performing sectors.

All retail total returns are expected to show marginal growth of 0.6% this year, having suffered a 12.4% decline in 2020.

The office sector has also been going through structural change with lease lengths shortening according to Colliers.

While the proportion of deals signed with lease commitments in excess of three years averaged out at 77% between 2016-2019, in 2020 the equivalent number was down to just 53%.

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Colliers expects all industrial yields to stand at 4.73%. Going forward, the firm predicts a stabilisation in 2022 and very mild outward shifts thereafter.

Given the ongoing strength of rental growth, all industrial total returns will show growth of 16.1% this year, the firm says, before slowing to a more sustainable rate of 5.4% in 2022.

John Knowles, head of National Capital Markets at Colliers, added: “It is particularly hard to forecast across all sectors over the next six months, however it does seem that industrial will continue to benefit from a demand driven market, much as it has done over the last 18 months. I have high hopes for the office sector, as confidence returns as people start to occupy their workplace again and business travel should open up to some extent over the next couple of months.”

Source: Punchline

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The Kent towns where sold prices spiked the highest during lockdown

House prices have seen record rises between March 2020 and 2021, according to new data from the Office for National Statistics.

In spite of worries about the economy and the housing market since the onset of the global pandemic, property prices in Kent and the UK more broadly have remained strong.

Overall, our county has seen substantial rises, whilst the picturesque Tunbridge Wells has seen prices rocket by the most locally in the past year.

In March 2020, the average house price in Tunbridge Wells was £377,298, but by March 2021, it had jumped by 10.5 per cent – or £39,768 – to £417,066.

In other parts of Kent, prices were also up.

In Folkestone and Hythe, average prices rose by 12.9 per cent, or £33,491, to £293,076 at the end of March.

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Meanwhile there was a 13.7 per cent rise in Thanet, an increase of £32,004 to £265,517.

Canterbury and Dover also saw large proportional spikes, rising by 10.7 per cent and 11.5 per cent respectively.

Compared to the rate of real wage growth, calculated by subtracting the rate of inflation from wage increases, this is even more significant – as during the pandemic, wages rose by just 2.8 per cent on average.

Across Kent as a whole, prices have risen by 8.8 per cent – or £25,647 – in the past year to an average of £317,251.

This means that house prices in Kent are now more than 10 times the average yearly income in the UK, which currently stands at around £31,000 a year.

This is slightly lower than the UK on average, clocking in at an increase of 10.2 per cent across the same period according to figures from the ONS.

This is the highest annual growth rate the UK has seen since August 2007, before the infamous ‘credit crunch’ financial crisis.

Early 2020 saw the housing market grind to a halt – as the first lockdown starting in late March closed estate agents and banned viewings.

Once things reopened, the UK’s average house price growth accelerated rapidly.

Th ONS said the pandemic may have caused house buyers to reassess their housing preferences.

The average price of detached properties increased by 11.7 per cent in the year to March 2021, in comparison flats and maisonettes rose by 5.0 per cent over the same period.

Here is the detailed breakdown of house prices across Kent.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Change in house prices from March 2020 to March 2021

From left to right, the statistics are as follows: District, average house price in March 2020, average in March 2021, price growth in £, price growth in percentages

Tunbridge Wells // £377,298 // £417,066 // £39,768 // 10.5%

Folkestone and Hythe // £259,585 // £293,076 // £33,491 // 12.9%

Thanet // £233,513 // £265,517 // £32,004 // 13.7%

Canterbury // £296,522 // £328,203 // £31,681 // 10.7%

Dover // £247,252 // £275,797 // £28,545 // 11.5%

Dartford // £296,658 // £324,905 // £28,247 // 9.5%

Kent // £291,604 // £317,251 // £25,647 // 8.8%

Sevenoaks // £438,933 // £463,573 // £24,640 // 5.6%

Tonbridge and Malling // £366,893 // £390,617 // £23,724 // 6.5%

Maidstone // £285,672 // £307,072 // £21,400 // 7.5%

Medway // £239,359 // £258,787 // £19,428 // 8.1%

Ashford // £295,451 // £312,957 // £17,506 // 5.9%

Swale // £240,915 // £256,208 // £15,293 // 6.3%

Gravesham // £280,197 // £290,077 // £9,880 // 3.5%

By Claire Miller and Harry Higginson

Source: Kent Live

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HMRC: April resi transactions highest for that month since 2007

HMRC’s provisional non-seasonally adjusted estimate for UK residential transactions in April 2021 was 111,260, the highest total in April since 2007, when transactions were 126,450.
However, this is a drop from the March 2021 figure of 190,980.

Provisional non-seasonally adjusted UK residential transactions in April 2021 increased 197.8% year-on-year, but a substantial amount of this difference is due to the impacts of the COVID-19 pandemic on the April 2020 statistics.

In addition, the non-seasonally adjusted estimate of 392,170 for UK residential transactions during quarter one of 2021 was the highest Q1 total since the introduction of stamp duty statistics in their current format in 2005, and the highest quarterly total since Q2 2006 (419,270).

Due to the pandemic, quarter two of 2020 was the lowest quarterly total for UK residential transactions since Q1 2009.

Provisional estimates of UK residential transactions in April 2021 have shown an impact from the temporarily increased nil rate bands for stamp duty and and Land Transaction Tax (LTT).

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Following year-on-year decreases in April and May 2020 of around 50%, caused by the pandemic, non-seasonally adjusted UK residential transactions have gradually increased, peaking in March 2021 with a provisional estimate of 173,410.

For non-residential transactions, non-seasonally figures in April 2021 increased 94.4% year-on-year, but again this will largely be due to the effects of the pandemic on last year’s data.

Provisional estimates of UK non-residential transactions in April 2021, 10,520 non-seasonally adjusted and 10,160 seasonally adjusted, are similar to levels reported during April in recent years, excluding 2020.

Following yearly decreases in April and May 2020 of around 45% caused by economic effects around the pandemic, non-residential transactions have followed a generally increasing trend during subsequent months.

Joshua Elash said: “Transactions are significantly down from March due to a large number of purchases completing that month in anticipation of the stamp duty holiday expiring.

“It evidences how significant an impact the scheme is having on buyer appetite and confidence.

“April was always going to be softer in terms of number of transactions.

“The annual rebound has, however, been stunning.

“A year ago, the first lockdown bit into the property market hard, and this comeback is nothing short of astonishing.

“All in all, the data continues to support a growing argument that stamp duty should be abolished completely so as to continue to encourage transactions, upward mobility, and to support the economy.”

Mark Harris said: “April’s dip in transactions compared with March is likely to be at least partly due to the anticipated end of the stamp duty holiday, before its extension was announced, which resulted in buyers taking their foot off the gas to get deals done.

“Now that the holiday has been extended, activity has picked up again.

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“Compared with April last year, when the housing market was closed to business thanks to the pandemic, there has been a massive 179.5% jump in transactions.

“That reflects the grinding to a halt of the market, as well as the surge in demand created by COVID, with more people bringing forward moves to the country and a growing desire for more space, both inside and out.

“On the lending front, lenders have plenty of cash and are keen to lend.

“There are some very competitive products, and with Nationwide returning to 95% LTV mortgages at lower rates than its competitors, it is a good time to borrow.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Although these figures reflect many sales agreed several months ago, they show a reduction in activity as many buyers did not expect to still take advantage of the stamp duty holiday.

“However, activity has picked up strongly since the deadline was extended, allowing many to continue where they left off, as well as encourage new entrants to the market.

“Transactions are always a better measure of housing market strength than prices which tend to fluctuate.

“On the ground, supply is still a problem even though listings have improved as rollout of the second jab in particular is encouraging sellers to make their properties available.

“It is not only some sellers who are trying to profit from the home buying frenzy but certain solicitors are charging exorbitant fees to take on work, whereas others are working evenings and weekends to make sure they get over the line in time.”

By Jessica Bird

Source: Mortgage Introducer

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Commercial Finance – Business Interruption Loans and COVID

How COVID-19 Has Impacted Commercial Finance

The COVID-19 pandemic has left a lasting impact on many aspects of life, from restrictions on social lives, to businesses going into administration. Even though the UK economy is now experiencing a period of positive growth, mainly due to the pace of the vaccination programme, the financial impact of the pandemic is still very visible.

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Shortly after the first lockdown restrictions came into place, lenders were quick to tighten their lending criteria, to try and protect themselves from the expected risk of higher unemployment levels and people struggling to pay off mortgages and loans.

Commercial finance was affected in a similar way, with so many businesses being forced to close during lockdown, the commercial finance landscape lurched into unknown territory.

Many businesses were provided with financial support in the form of furloughing, business interruption loans and bounce back loans but others were unable to apply for these. Some lenders offered holiday payments for commercial finance, so there were numerous financial support options in place to try and help struggling businesses survive the pandemic.

Commercial Mortgages UK Adverse Credit and BTL

As an independent UK Commercial Mortgage Broker we carefully examine all the Buy-to-Let mortgage offers from leading whole of market lenders across the UK. You will benefit from low interest rates, lenient eligibility criteria and a simplified procedure. You also have the choice of Second Charge Mortgages, Adverse Credit Mortgages for individuals with crediting challenges, to straightforward Residential Mortgages for your own home.

With the reassurance of attractive Mortgage Protection Insurancee options, we also offer specialist mortgage broker services such as self-employed Contractor Mortgages, Expat Mortgages, home loans and Sharia Mortgages, to commercial Serviced Accommodation Finance from holiday homes to Property Investors, Developers and existing Homeowners.

Business Loan Applications – UK’s Changing Priorities

The priority for the government was to assist existing businesses, rather than helping new businesses to launch, which was highlighted by the financial support options that were made available. Startup loans were still available from some lenders but it was now harder for many would-be entrepreneurs to access loans.

In the UK, many people use startup business loans to buy the equipment and pay for other essentials when they start up a business. With the economic downturn, many lenders have withdrawn products from the market and tighter lending criteria was applied.

However, the Bank of England cut interest rates down to 0.1% which meant that some of the new business loan interest rates have been more attractive for startup business owners, but there is a more comprehensive set of lending criteria to enable lenders to manage risk in the unstable climate.

COVID Government finance support schemes for businesses

To assist existing businesses who had been adversely affected by coronavirus, the government introduced the following schemes to support cashflow during this challenging period:

Interest-Free Business and Commercial Loans

Coronavirus Business Interruption Loan Scheme (CBILS)

SME businesses have been able to access business interruption loans for lost revenue and cashflow disruptions. The CBILS was also made available to businesses whose growth requirement could not be supported under standard bank lending criteria. Under the scheme, businesses who had been adversely affected by the pandemic could apply for loans of up to £5million.

The first 12 months of the loan is interest-free and the interest rates after a year for the CBILS scheme were set by the lenders. Some lenders provided the loans with an interest rate as low as 1.4%, while at the higher end of the scale, some lenders were offering the loans with a 8.9% interest rate. Terms were available for up to 10 years.

To encourage more lending, the government also guaranteed loan repayments, with the borrower being fully liable for the debt.

Lenders were able to provide the following finance under the CBILS scheme:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Bounce Back Loan Scheme (BBLS) SME and Sole Trader Businesses

The Bounce Back Loan was aimed to support smaller businesses and sole traders, to provide them quick access to financial support. The scheme allowed businesses to borrow between £2,000 and up to 25% of their turnover (to a maximum of £50,000). For the first 12 months, there is no interest to pay and following that first year a rate of 2.5% would be applied.

The maximum loan length for the BBLS was six years and this scheme also came with a guarantee to the lender from the government for the repayment, with the borrower remaining liable for the debt.

Pay As You Grow (PAYG) Business Support

For businesses who took out the BBLS, the option for PAYG was later introduced to provide further support, allowing:

  • An extension of the loan term from six years up to 10 years, remaining at 2.5% interest rate.
  • Reduction of monthly payments by paying interest-only for six months. This could be requested up to three times throughout the term of the loan.
  • A repayment holiday of up to six months, which was only available once during the term.

Other financial support provided to businesses included:

Job Retention Scheme – Paid in the form of grants to pay 80% of the salaries of furloughed employees.

New Restart Grants – A one-off cash grant of up to £18,000 for businesses re-opening from April 2021, including pubs, hotels, restaurants, gyms, salons and clubs.

Business Rates Holidays – Business rates were cancelled for all retail, leisure and hospitality businesses for the tax year 2020-21 and up to June 2021, with a discounted rate for the remainder of the tax year.

Recovery Loan Scheme – This has replaced the BBLS and allows businesses to apply for between £25,000 and £10m. The government has given lenders an 80% guarantee for these loan repayments.

There have also been other schemes for different types of businesses, some made available through local authorities.

Commercial Finance Landscape Has Changed – Conclusion

COVID-19 has completely changed the landscape for commercial finance, particularly as the government has been compelled to step in to help save businesses from closure or building up unmanageable debts.

Lenders have been able to provide loans under the schemes with the security of knowing that the repayments are guaranteed by the government, which has helped them to continue providing finance to businesses when the risk to them is extremely high.

The success of the UK vaccination programme has already had a significant impact on economic recovery in the UK and the combination of this, along with the support that the government has provided will certainly have saved many businesses which otherwise would have gone into administration.

Experts are predicting that over the next few years should hopefully see a shift back towards the type of commercial finance products that were available pre-COVID, albeit with stricter lending criteria until we see a full economic recovery.

Commercial Finance Network is a specialist Commercial Finance Broker offering all types of commercial finance to SMEs along with individual investors. Get in touch today via either our Contact Form or call us on 03303 112 646.

Commercial Business Finance – The Rise of AI In The Banking and Lending Circles

June, 2017 archives: “Artificial intelligence can help people make faster, better, and cheaper decisions. But you have to be willing to collaborate with the machine, and not just treat it as either a servant or an overlord,” says Anand Rao, PwC Innovation Lead, Analytics.

The quote neatly sums up our relationship with AI technology. Although we appreciate its potential, we feel edgy about its power and possibilities. However, despite this, it’s pervading our lives as consumers, whether we like it or not. Every time we receive a marketing email or product recommendation, we can be sure the algorithms have been at work and we are far from the random target.

Despite its image of being cautious and conservative, the banking industry as a whole appears to have had few qualms about adopting the technology – and it seems that, as consumers, we are happy with this. A mammoth survey of around 33,000 consumers by Accenture found that more than 70 percent of us would be willing to receive computer-generated banking advice. “Automated servicing can be the sole source of data from some customers, even when making complex decisions around products,” says the report.

One of the main uses of AI so far has been in customer service. Chatbots are becoming the de facto alternative to banking apps. This use AI to simulate conversion through written or spoken text. Just as Amazon has humanised its digital assistant by calling it Alexa, so has the Nordic banking group Swedbank created ‘Nina’. This chatbot is clearly popular; within three months of being deployed, Nina was averaging around 30,000 conversations per month.

However, this is the sharp end of AI – the human/machine interface mainly used in the consumer-facing world of retail banks. But how does – or will – AI play out in a commercial finance environment?

The business sector is understandably more cautious, prudent perhaps, about adopting new technologies until they have matured. But as millennials take up more senior roles in the commercial banking world, they will be increasingly pushing for the rich functionality they know as consumers to also be integrated into their working environment.

Today, we are seeing signs that adoption rates of AI-based technology are set to take off in business banking too. More and more banks are borrowing retail banking experience to build out their commercial and business strategies. But while the focus of its use in the retail banking world has mainly been for customer service and sales applications, in commercial banking, use cases (initially at least) are likely to be more around streamlining operational processes.

In a sense, AI as it stands today, in this environment is all about automation, about making processes faster and more efficient. And there are a raft of applications here where automation is having a hugely positive impact.

Take the introduction of digital expenses platforms and integrated payments tools, both of which have the potential to significantly improve a business’s approach to how it manages cash flow. By having an immediate oversight, through live reporting of all spending from business cards and invoice payments, as well as balances and credit limits across departments and individuals, businesses can foresee potential problems more quickly and react accordingly. All these services become even more powerful when combined with technologies like machine learning, data analytics and task automation.

We are already seeing growing instances of AI and automation being used to streamline payment processes in banks. Cards can be cancelled or at least suspended quickly and easily and without the need to contact the issuing bank, while invoices can also be automated, to streamline business payments. This means businesses can effectively keep hold of money longer and at the same time pay creditors more quickly. Moving beyond straightforward invoice processing, intelligent payment systems can be deployed to maximise this use of company credit lines automatically.

Looking ahead, we see a string of applications for AI in the payments management field around analysing data with the end objective of spotting anomalies in it. With the short and frequent batches of payments data used within most enterprises today, it is unlikely that even the best-trained administrator would be able to spot transactions that were out of the normal pattern. The latest AI technology could be used here to tease out anomalies and pinpoint unusual patterns or trends in spending that could then be investigated and addressed.

While this area remains in its infancy within the banking and financial services sector, with technology advancing, financial services organisations and the enterprise customers they deal with will in the future will be well placed to make active use of AI that will help clients track not just what they have been spending historically but also to predict what they are likely to spend in the future. AI will ultimately enable businesses to move from reactive historical reporting to proactive anticipation of likely future trends.

Source: Russell Bennett, chief technology officer, Fraedom

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London house prices start to stabilise after three-year dip

Signs that London’s house prices could be starting to stabilise emerged this morning, with a new study showing that values picked up slightly in February.

According to Zoopla, househunters that have previously held off on deals are seeking out buying opportunities in the capital following weaker house price growth amid the Brexit uncertainty.

The property portal said that “while market conditions remain weak, there are signs of a pick-up in demand following a 3-year house price re-correction of London homes”.

The rate of London’s annual house price growth picked up modestly in February, climbing 0.4 per cent when compared with the same month in the previous year.

The number of London postcodes registering a fall in house prices also dipped from 69 per cent in October to 55 per cent in February.

Every city in the UK registered a rise in house prices in February for the first time since 2015.

The city which saw the sharpest year-on-year rise in house prices was Leicester, which registered a 6.8 per cent bump in values over the 12 months.

Richard Donnell, research and insight director at Zoopla, said that there was a “greater realism on pricing by sellers”.

Donnell added: “With unemployment at a record low and mortgage rates still averaging two per cent, buyers appear to be largely shrugging off Brexit uncertainty until there is a material change in the overall outlook.”

Yet today’s figures come despite a swathe of recent data showing that activity in the capital’s housing market has largely continued its downward trajectory in recent months.

House price rises in January fell to 1.7 per cent across the UK, according to recent Office for National Statistics (ONS) data, with London recording the lowest annual growth out of any region.

The Royal Institution of Chartered Surveyors (Rics) also warned recently that uncertainty over Britain’s imminent departure of the EU is likely to damage the UK housing market over the coming months.

By Sebastian McCarthy

Source: City AM

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House prices up 2.8% over the last year

Leicester and Manchester have recorded price growth of 17% since the Brexit vote in June 2016, followed by a 16% increase in Birmingham, Zoopla’s UK Cities House Price Index has found.

The index, powered by Hometrack, found prices have been rising by 5% or more in seven cities led by Leicester, Manchester and Glasgow.

Andy Soloman, founder and chief executive of market researcher Yomdel, has found: “Extremely positive to see the larger, economic hubs of the UK all clock up some positive mileage so early in the year where price growth is concerned.

“I think we’ve now seen a shift in mentality amongst both buyers and sellers who realise if they do wish to sit on the fence until Brexit is finalised, they could be there quite some time.

“As a result and much like Brexit, people just want to get on with it now and sellers are adjusting their price expectations in line with the current market climate, while buyers are taking the plunge and proceeding with a purchase.

“This uplift in demand and market activity has stimulated the market and provided the first concrete signs of a pulse after running on life support for quite some time.”

This is the first time annual price growth has been positive across all 20 cities for 3.5 years, since August 2015, primarily a result of growth finally turning positive in Aberdeen.

Average house prices increased by 2.8% over the last year,Annual price inflation ranges between +6.8% in Leicester to +0.2% in Cambridge.

The annual rate of growth in London has increased slightly to +0.4%. While market conditions remain weak, there are signs of a pick-up in demand following a 3-year repricing of London homes.

This repricing process has come in two forms, absolute price falls which have been concentrated in higher value markets, and a widening in the discount between asking and achieved prices, with the largest discounts in inner London.

Our granular house price indices for London reveal that the proportion of postcodes registering price falls is starting to reduce.

The latest data reveals that prices are falling across 55% of London postcodes, down from almost 70% last October.

The rate at which prices are falling in these markets is relatively low – 0% to -5%. Prices continue to increase in 45% of London City postcodes, typically lower value, more affordable areas in outer London.

Buyers who have delayed purchases and stood on the side-lines since 2015, are starting to see greater value for money, perhaps seeking out buying opportunities while Brexit uncertainty impacts market sentiment.

While London has registered weak growth, regional cities outside southern England have recorded above average price inflation over the last three years. This is a result of better affordability and rising employment which has boosted demand.

The rate of price inflation in regional cities has started to moderate. Hometrack prediction this will continue over the remainder of 2019 and Birmingham and Manchester to start to lose momentum.

Its granular price indices for Birmingham and Manchester, found a significant increase in the proportion of postcodes registering growth of 0% to 5% and fewer areas recording growth over 5% per annum.

This is a result of growing affordability pressures as well as increased uncertainty. We expect prices to keep rising in these cities but at a slower rate, closer to earnings growth.

This follows the pattern recorded in cities such as Bristol and Bournemouth in southern England.

Brexit uncertainty is often cited as the cause of weaker house price growth over the last 12-18 months. Hometrack said it is more complex than that and sees Brexit uncertainty as a compounding factor in markets where fundamentals have weakened.

Price growth is just one measure of relative market strength. Levels of housing transactions are another important measure for businesses operating in the market. The willingness and ability of households to move home underpins revenues and business plans.

Data on transactions remains resilient with no obvious Brexit impact at a national level. Transaction volumes over 2018 remained in line with the 5-year average. The same is true for mortgage approvals for home purchase.

There has been no material drop in activity over 2018H2 as the Brexit debate has heated up. The very latest data from HMRC showed that housing transactions have increased slightly in the first two months of 2019.

With unemployment at a record low and mortgage rates still averaging 2%, buyers appear to be largely shrugging off Brexit uncertainty until there is a material.

By Michael Lloyd

Source: Mortgage Introducer

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Expert Panel Unanimous on Future Optimism in UK Housing Market

A panel of experts were unanimous in their belief that there are grounds for optimism in the UK housing market over the next five years, at an opening debate for the Landlord Investment Show 2019 in London Olympia.

The Landlord Investment Show 2019 kicked off at Olympia London on March 21st, commencing with a government panel debate hosted by publisher and broadcaster Andrew Neil. The debate ranged over a wide variety of pertinent topics, such as Brexit and housebuilding, as well as the obstacles homeowners and landlords currently face.

The panel’s three expert panellists were unanimous in voicing optimism for the UK housing market over the next five years, with some of them believing market fundamentals to be strong and supportive, despite apparent political uncertainty in the present.

The panel consisted of four guest speakers, including Iain Duncan Smith MP; Sarah Davidson, knowledge and product editor of This is Money; Paul Mahoney, founder and managing director of Nova Financial Group, as well as Tony Gimple, founder of Less Tax 4 Landlords.

Mr Duncan Smith, former leader of the Conservative party, used the debate as an opportunity to voice his concern about housing policies implemented in recent years. He believed former Chancellor of the Exchequer George Osborne’s economic policies “had led to landlords scaling back or even leaving the sector entirely”.

Strong turnout at Olympia

As many as 4,300 guests attended the National Landlord Investment Show in Olympia last week. Following the positive verdict on future sentiment in the housing market from the guest panellists at the opening debate, attendees were invited to a variety of seminars, including a special Brexit seminar.

The subject of Brexit was no doubt at the forefront of the minds of many attendees, especially following the developments of preceding days in Westminster. However, Brexit was not the only topic for people to talk about at this year’s event.

Attendees were also invited to attend seminars on the subject of opportunities and threats in the property market for the year ahead, as well as a legal debate chaired by Paul Shamplina, founder and director of Landlord Action. The legal debate centred on topics of great interest to the audience, including the subject of buy-to-let, as well as the private rental sector.

Opportunities for forging new connections

For budding investors keen for some further insights on the subject of buy-to-let, there was a seminar on the subject of being a beginner in property, hosted by a representative from the Property Investors Network.

Buy-to-let proved to be a topic with much coverage during the day, with talks including a morning seminar on the subject of buy to let property investment fundamentals, mistakes and changes, by Paul Mahoney, as well as an educational seminar on how to finance buy-to-let property, held by Jeni Browne, Sales Director at Mortgages for Business.

There were as many as 88 stands erected at the venue for the occasion, giving plenty of opportunities for guests to delve into intriguing ventures and make new connections. Despite the recognition of an overall slowdown in the housing market in the first few months of 2019, National London Investment Show at Olympia was a hive of activity, with attendees showing great keenness to explore new opportunities for the year ahead.

Source: Property118

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Bank of England set for step into unknown with first rate hike since 2007

LONDON (Reuters) – The Bank of England looks set to step into the unknown on Thursday, when it is expected to raise interest rates for the first time since 2007 at a time when growth appears weaker than before any other rate rise of the past 20 years.

Having cut rates to a record low 0.25 percent in August 2016 after Britons voted to leave the European Union, the Bank is now correcting course and falling in line with the U.S. Federal Reserve and the European Central Bank, which are either raising rates or scaling back stimulus.

Whereas the United States and the euro zone are enjoying robust growth, however, Britain’s economy has grown at its slowest pace in more than four years over the past 12 months.

Quarterly growth of 0.4 percent offers the weakest backdrop to any rate rise since the Bank became independent in 1997.

True, inflation is at a five-year high of 3.0 percent, a full percentage point above the Bank’s target, but that is mainly because the pound is an average 11 percent weaker against the currencies of Britain’s main trading partners since the Brexit vote.

The Bank has often overlooked past spikes in inflation if they were caused by currency fluctuations that were deemed to be temporary.

Inflation is set to fall this time too, but only slowly, as the Bank judges domestic inflation pressures are pending.

Partly due to stagnant productivity since the 2008 financial crisis – and partly due to concerns about the effect of Brexit on immigration, trade and investment – BoE Governor Mark Carney thinks the economy cannot grow as fast as it has in the past without generating excess inflation.

“We’re in a new paradigm,” says George Buckley, an economist at Nomura who was one of the first to sense a change at the central bank earlier this year, when most economists were saying they did not expect rates to rise until 2019.

Raising rates now would be the biggest call on monetary policy Carney has made as governor, and may shape his legacy.

Carney has faced criticism from economists who say his past guidance on monetary policy has been unhelpful, and from Brexit supporters who say he is too focused on the risks of leaving the EU. But until recently his broad approach to interest rates has been fairly uncontroversial.

For most BoE watchers, the likelihood of a rate rise only became clear in September, when minutes of the nine-member Monetary Policy Committee’s meeting that month showed underlying price pressures were no longer a minority concern.

Two policymakers voted for a rate rise, and a majority of the others said they expected to do so “over the coming months”.


Almost all economists polled by Reuters last week expect the Bank to raise interest rates to 0.5 percent from 0.25 percent on Thursday. Most do not expect another one next year and 70 percent said even one rate rise would be a mistake. The latter view is common in markets, too.

“Personally, I think it would be mad,” Jim McCaughan, chief executive of Principal Global Investors, which manages $430 billion of assets, told Reuters earlier this month.

“You’d be tightening at a time of economic softness to defend against a weakness in sterling that you need (to boost exports).”

The Bank says its policy decisions are not driven by exchange rates. When Carney gives his news conference at 1230 GMT on Thursday, he is likely to focus on a 42-year low in unemployment and how it heralds more upward pressure on wages and inflation.

The Bank has been here before, however. Unemployment has repeatedly fallen further than the BoE forecast in recent years, while wage growth has remained stubbornly around 2 percent, half the 4 percent rate associated with pre-crisis rate rises.

Investors will be keen to glean what is meant in practise by the Bank’s long-standing stated expectation that it will only raise rates “at a gradual pace and to a limited extent”.

Markets have priced in an almost 90 percent chance of a rate rise on Thursday, but then expect the Bank to wait until late 2018 before raising again, Nomura’s Buckley said.

He said that was probably too long for the BoE’s tastes. On the other hand, however, Carney will not want to box himself in or lead the wider public to believe he plans to return rates to their pre-crisis level of around 5 percent.

Economists do not expect one or two rate rises will hurt growth much unless businesses or the public think many more will come and curb spending as a result.

BoE forecasts showing inflation is still expected to exceed its target even after three years might be the clearest sign that the Bank thinks faster rate rises are needed, Buckley said.

Either way, the stakes are high both for the Bank and its governor, who has said he will step down at the end of June 2019.

“If he presides over a tightening of monetary policy and it slows down the economy, that’s what he will be remembered for,” McCaughan said.

Source: UK Reuters

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London’s commercial property market outlook is being dampened by concerns of a downturn

London’s commercial property market outlook is more subdued than elsewhere in the country, with the capital bucking the UK trend for rising demand from investors and occupiers.

Almost three quarters of respondents to a survey by the Royal Institution of Chartered Surveyors (RICS) warned the market may be in some stage of a downturn, when outside of the capital, expectations were generally positive for office, retail and industrial rent.

Read moreCommercial property investment in the City set for a record year

The survey of 347 of RICS’ commercial property members found that negative sentiment regarding office and retail rent cancelled out positive expectations for industrial rent in the capital.

In the near term, London is also displaying more cautious sentiment, with weakening occupier demand producing negative rent expectations, while availability has picked up, as have inducements.

When it comes to the investment market, RICS said trends appear a bit more resilient, but headline capital value expectations are now more or less flat.

The central London market also had the highest proportion of respondents viewing it as overpriced to some extent, at 67 per cent.

Simon Rubinsohn, RICS’ chief economist, said:

The underlying momentum in the occupier market remains a little more challenging in the capital than elsewhere with rents expected to remain under pressure away from the industrial sector. This is also mirrored in valuation concerns, with around two thirds of respondents viewing the London market as being expensive.

Despite this, foreign investors continue to view London in general and the office sector in particular as an attractive home for funds.

Rubinsohn said a particular issue going forward will be how the market responds to the “likely first interest rate rise in a decade next month”.

He said: “Given that expectations are only for a modest tightening in policy, the likelihood is that it will be able to the weather the shift in the mood music. But this remains a potential challenge if rates go up more than is currently anticipated.”

Read moreBrexit hits investor demand for UK commercial property

Source: City A.M.