Is the housing market stalling?

Britons warier about house-buying

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A sign is seen outside newly built houses in Aylesbury, southern England August 13, 2013. .

CREDIT: REUTERS/EDDIE KEOGH

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(Reuters) - Britons are feeling much less positive about buying a house while sentiment toward selling is improving, according to a survey on Monday which added to other suggestions that thehousing market is losing a bit of steam.

The survey by mortgage lender Halifax showed the balance of people who felt it was a good time to buy fell sharply by 29 points to 5 in the second quarter, the largest fall in this measure since the survey began in April 2011.

Conversely, 57 percent felt it would be a good time to sell in the next year, with 32 percent thinking it would be bad.

Britain's housing market has had a rapid recovery, with prices rising by an annual 11 percent nationally by one measure. A lack of new homes coming onto the market has been cited as an important factor.

Bank of England Governor Mark Carney last week reiterated his view that the housing market represented the biggest domestic risk to Britain's economic recovery.

However, there have been some signs that the market might be cooling off including a fall in measures of house prices compiled by Halifax and the Royal Institution of Chartered Surveyors

"People believe that it's a good time to sell but not buy, particularly in London and the South East where house price expectations are generally higher and buyers appear to be less inclined to rush into buying a property as we have seen over the past 12 months," said Halifax Mortgages Director Craig McKinlay.

http://uk.reuters.com/article/2014/07/28/house-prices-halifax-idUKKBN0FX0DI20140728

Stamp duty revenues hit £10 billion

HMRC has raised £10 billion through stamp duty on property transactions in the year to the start of July. 

This includes commercial property too but the surge in revenue to the Exchequer is largely down to sharply rising transaction volumes and prices on residential properties in many areas of the country.

This total means more stamp duty has been paid on property in the past 12 months than in any comparable period since the start of the downturn in 2007/8, when a roughly similar amount was collected.

HMRC’s release of these figures comes as a calculation by estate agent Haart shows that the average house will incur an extra £5,000 in stamp duty within two years if prices continue to grow at their current pace.

It claims the average house price in England is currently £204,429 and the current rate of growth is 10 per cent a year - rather more optimistic than most agents report and much higher than many housing indices indicate. 

But if that double digit house price growth occured for the next two year, it would push the average house into the three per cent stamp duty category by 2016. 

Haart chief executive Paul Smith says policymakers should consider reforming the current duty thresholds. “The government and the Bank of England need to be careful not to over cool the market and by raising the threshold could help keep the market fluid” he says.

http://www.estateagenttoday.co.uk/1076-stamp-duty-revenues-hit-10-billion

Private rented sector continues to grow in Southampton and accross the UK

Owner-occupation dips again in England

Only 65 per cent of the 22m households in England are now owner-occupied; 18 per cent are privately rented and 17 per cent live in housing association or council flats or houses.

The figures, from the latest findings from the English Housing Survey, apply to 2012-13 but represent the smallest proportion of owner-occupiers since the 1980s. 

Throughout the 1980s and 1990s, the proportion of private sector households was around 10 per cent but it has nearly doubled in the past decade; the private rented sector accounted for 4m households in 2012-13 with social rented at 3.7m households.

Some 18 per cent of households buying with a mortgage were aged below 35 compared with 21 per cent five years earlier. 

In 2012-13, the average mortgage payment was £149 per week although payments differed markedly depending on the type of mortgage; interest-only holders were paying an average of £120 per week compared with £154 for those with repayment mortgages. Of the 14.3m households that were owner occupiers, there were 7.2 million with mortgages.

As always the EHS also provides a random selection of other barometers for England’s housing - its condition, level of overcrowding, energy-efficiency and the like. Here are some key facts:

- Some three per cent of households in England were overcrowded in 2012-13;

- Two-thirds of social renters had waited less than a year before being allocated a home;

- Sixty one per cent of private renters and 23 per cent of social renters stated that they expected to buy a property at some point in the future;

- The energy efficiency of the English housing stock continued to improve, with the largest increases in energy effectiveness seen in private rented and local authority sectors;

- The number of ‘non-decent’ (very poor condition) homes in England continued to decline. In 2012, 4.9 million dwellings - equivalent to 22 per cent - failed to meet the decent homes standard, a reduction of some 2.8 million homes since 2006;

- Between 2002-03 and 2012-13, the proportion of households with a working smoke alarm increased from 76 per cent to 88 per cent; 

- Just over half of homes built after 2002 had one or two bedrooms compared with 37 of older homes; 24 per cent of homes built after 2002 had three bedrooms compared with 43 per cent of older homes. Private rented

http://www.estateagenttoday.co.uk/index.php?option=com_k2&view=item&id=1072:owner-occupation-dips-again-in-england&Itemid=583

How do Southampton Landlords feel about the new immigration changes

Immigration change "too onerous for landlords"

Monday 21st July 2014

New research shows that 80 per cent of landlords believe new immigration legislation which comes into force in October 2014, places too much responsibility on them. 

The study, conducted by The Online Letting Agents on 300 landlords across the UK, reveals that 43 per cent of landlords are not confident about making the checks that will be required by the legislation, while just 30 per cent are optimistic that they will cope with the new checks.

When it comes to selecting new tenants, nearly half of landlords say they will be much more wary taking on tenants that they think might be immigrants. Despite reassurances that landlords will not be responsible for illegal ‘ghost’ tenants that are living in their properties, 11 per cent of landlords are still worried that they will be responsible for any illegal tenants subletting.

Eleanor Carroll, director of The Online Letting Agents, says the new laws are ”a big burden on both letting agents and landlords and there is no way around it. Landlords and agents will need all the help they can get to integrate the new checks and validations into their overall tenant application process.  Not surprisingly, there are a number of companies now offering immigration checking services.”

Carroll believes the danger is that agents and landlords will refuse potential tenants if they believe them to be immigrants. 

http://www.landlordtoday.co.uk/news_features/Immigration-change-%22too-onerous-for-landlords%22

UK house prices fall for the first time this year

Property prices across the UK fell this month as stricter lending rules put the brakes on the runaway housing market

By Anna White, Property and enterprise correspondent

7:12AM BST 21 Jul 2014

11 Comments

Asking prices in Britain have fallen for the first time this year as stricter lending rules, looming interest rate rises, and the distraction of the World Cup cool the rampant housing market.

The advertised cost of a UK home fell 0.8pc from £272,275 in June to £270,159 in July, according to new data from the property portal, Rightmove.

The North and the East Midlands suffered the biggest declines of 1.9pc each, while house prices in Greater London dropped 0.4pc this month, as the Capital hit an affordability ceiling and demand across the country curtailed.

Property values have fallen for the first time in 2014, down by £2,116, with the UK’s annual growth rate slowing from 7.7pc in the 12 months to June to 6.5pc in the year to July, due to tighter regulation on mortgage eligibility, the Rightmove House Price Index revealed.

“A price fall in July is not unexpected as prospective buyers turn their attention to the summer holidays, not the mention the distraction of an engaging World Cup,” said Miles Shipstone, analyst at Rightmove. “Buyer confidence may also have taken a knock with suggestions that mortgages are becoming harder to get, and repayments may get more costly sooner than originally anticipated, should the rumours of an interest rate rise before the next election come true.”

Off-the-back of a string of warnings from Mark Carney (pictured below) that the frenzied London housing market is the biggest threat to the UK economy, the Governor of the Bank of England took steps to prevent reckless lending and curb rising household indebtedness last month.

The central bank told banks and building societies that they should only make 15pc of their total loans at 4.5 times the borrowers’ income and introduced a futuristic interest rate stress test for borrowers.

Such market disruption and additional red tape has slowed the mortgage approval rate and is being felt on the ground by UK estate agents.

Escalating values over the last 12 months, combined with conservative lending policy, have shut many prospective first-times buyers and young families out of the market, meaning the biggest group of movers are likely to be equity rich, third-time buyers, the Rightmove report found. “We forecast a slower-paced second half of 2014. But with bigger-deposit, third-time movers entering the fray and lenders still having lending targets to meet, there is still enough momentum to see an 8pc national average increase in new seller asking prices,” said Mr Shipstone.

This house price wobble is seen by the property portal as a seasonal dip during a traditionally quiet time of the year, that will pick back up in September, driven by a lack of housing stock.

A new report from online estate agent, eMoov, which is backed by former BBC Dragon, James Caan, found that the South-East’s supply crisis is spreading to other parts of the UK.

The latest Hot Spots index found that 75pc of the homes put on the market in the London borough of Bexley, in Q2, have sold, showing that the area is dangerously close to running out of supply.

Over-inflated prices in London, which are not matched by wage growth, have resulted in people buying further out to get more for their money.

The Index, which lists the top 99 most popular areas in which to buy, showed that Bromley has moved from 18th place in the index to sixth, with 62pc of its stock snapped up. Commuter city, Milton Keynes, has also benefitted from the London exodus, and was elevated from 25th to fifth, while the previously-fashionable pockets of Islington, Hackney and Haringey have all slipped in popularity, deemed too expensive.

Following a long term regeneration project, Portsmouth is edging towards a supply issue - with 63pc of its stock bought in Q2, compared to 55pc in the three months of January to March. Bristol showed a similar level of appeal.

“A supply-demand ratio of under 50pc is detrimental. That’s the tipping point between a sellers’ market and a buyers’ market. Conversely, when we see areas achieve ratios of 65pc plus, they tend to be overheating and that impetus is unsustainable which is why we’re seeing just about all London areas cool,” said Russell Quirk, founder of eMoov. “There’s a regeneration theme here too. We see that the old adage 'build it and people will come’ seems very true.”

But development across the UK has slowed in the last few months due to a lack of available land. “When they [good quality sites] do become available there is now a stampede of both domestic and overseas developers wanting to buy...Often overseas investors who don’t know the market so well, overbid for the site, so the domestic developer misses out,” said David Galman, director at Galliard Homes.

“The market has been strong, most of the stock is sold, which has left most London developers now desperately looking for new sites.”

http://www.telegraph.co.uk/finance/economics/10979391/UK-house-prices-fall-for-the-first-time-this-year.html

New build properties

Attractive Bitterne Buy 2 Let at 6.3% gross yield would suit Southampton Landlords

Good sized 1 bed apartment for sale in the popular Bitterne Park area of Southampton. The property is 5 mins walk from the local train station and comes with allocated parking. We have just gone let agreed on a similar unit in this development at £575pcm. Attractive Gross Yield of 6.3%. These properties let well to professionals given its proximity to the road network, shops and the city centre. Voids would be minimal. A nice buy 2 let and a good entry price.

Southampton 2 bed for sale by Auction on 24th July 2014 guide £85k / £95k, will yield 7.5% when complete!

Good opportuniuty to buy a 2 bed freehold house in the popular St Denys area of Southampton. In need of complete modernisation. Based on a cost of £95k and a £25k refurb, total cost will be circa £120k. A similar 2 bed sold on the same road for £138k in March 2014. Rent wise it will let at £750pcm and will yield 7.5%. A nice one if you want to get your hands dirty!

Landlords if you end up in a dispute with your tenant make sure your inventory is complete.

Tiny proportion of tenancies end in deposit dispute

Figures produced by one of the country’s three rental deposit schemes shows that only a tiny number of tenancies appear to end in deposit disputes.

The Deposit Protection Service recorded only 8,945 out of 1,105,619 tenancies – equivalent to 0.81% – needing to use its’ adjudication service at the end of a tenancy. This compared to 1.02% and 0.87% for the other two providers, Mydeposits and TDS.

DPS says the most common reason for a dispute is alleged property damage, with cleaning and redecoration requirements close behind – though there are sometimes more bizarre claims, such as for removal of cockroaches and repairs to a garden after a tenant had dug up a dead dog.

At the end of the dispute process, the figures show that DPS returned 18.5% of deposits in full to the landlord or letting agent. Some 54.7% of DPS’s disputed deposits were split between both landlord and tenant and 26.8% were refunded in full to tenants.

“Landlords and lettings agents are as worried by bad tenants as tenants are by bad landlords and letting agents. As long as a claim is substantiated with conclusive evidence, tenants as well as landlords should be warned – they can’t expect to default on rent, cause damage to properties or fail to fulfil tenancy conditions and then look for a deposit pay out,” warns DPS director Kevin Firth.

http://www.landlordtoday.co.uk/news_features/Tiny-proportion-of-tenancies-end-in-deposit-dispute

Are the yields in Southampton under pressure?

Rising property prices squeeze rental yields

Rising property prices are causing an about-turn in rental yields, according to the latest Mortgages for Business Complex Buy-to-Let Index.

Gross yields on vanilla buy-to-let properties have dropped to 6.3% in the second quarter, down from 6.4% in Q1. This comes as modest rent rises have been outstripped by rapid growth in property values.

More complex buy-to-let properties still command considerably higher yields.  Houses in multiple occupation (HMOs) saw gross yields of 9.3% in Q2 2014. While this is also down slightly from Q1 (9.6%), this gross yield remains around 50% higher than for vanilla properties.

Multi-unit freehold blocks (MUFBs) also offer a premium compared to standard buy to let investments. In Q2 2014 these properties commanded an average gross yield of 7.3%, almost a full percentage point higher than vanilla yields.

Landlords with standard buy-to-let properties have remortgaged at a record rate in Q2. Remortgaging now represents more than two-thirds (70%) of new vanilla buy-to-let mortgages. This compares to 65% in the first quarter of 2014.

http://www.landlordtoday.co.uk/news_features/Rising-property-prices-squeeze-rental-yields

Should Southampton Landlords use a Professional Letting Agent or look to manage their properties themselves?

Are your S8 and S21 notices wrong

Six in ten eviction notices are wrong

Research carried out by Landlord Action, the tenant eviction specialist, found that 62 per cent of the last 200 instructions received from landlords and letting agents that served their own Section 8 and Section 21 legal notices on tenants were incorrect. This meant they were invalid or posed a greater risk of being thrown out at court; resulting in the need for new notices to be served.

Some opt to serve notices themselves as a cost saving exercise, but Managing Director of Landlord Action, Paul Shamplina (left), warns that mistakes in eviction notices are among the most common reasons for delays and increased costs when a landlord tries to recover possession from a tenant who has an Assured Shorthold Tenancy (AST).  He commented: “I understand the need for landlords to consider every cost but I can’t stress enough that the notice is the most important part of a possession court case and the slightest mistake can end up costing a landlord significantly more than the cost savings - in extra legal fees, delays and lost rent.”

http://propertydrum.briefyourmarket.com/Newsletters/JUNGLEdrum---the-newsbeat-from-PROPERTYdrum113/Six-in-ten-eviction-notices-are-wrong-.aspx

Landlords beware of illegal sublets in Southampton

Illegal subletting warning

Tuesday 1st July 2014

A firm of high court enforcement officers has warned that the illegal subletting of rental properties is on the increase.

The Sheriffs Office says that an increasing number of tenants are finding their rental agreement is null and void while genuine landlords have no idea their property is being sublet room by room.

Writing on the Sheriffs Office website, David Carter says:

“We recently repossessed two adjacent properties for a landlord in Sutton, South London. He had let them out, not realising his two new tenants were actually husband and wife, because they were using different surnames.

“Once they had signed the tenancy agreements, they proceeded to sublet every room, often with a whole family in each room. The sub tenants all thought they had legitimate tenancies and were being given receipts for the rent – always payable in cash.

“Once the landlord found out, he obtained possession orders for both properties, which we enforced. The actual repossession started took over eight hours, partly due to the sheer number of people living there, and also due to carloads of tenants’ friends and families turning up to try to stop what was happening, legitimately they thought.

“I feel a good deal of sympathy for the sub tenants – they had done nothing wrong but had been victims of this pair of ruthless dishonest “fake landlords”, who were already wanted by the police.”

Carter says the Sutton case is part of a widespread problem with housing shortage problems, particularly in London, being met by “fake landlords” subletting properties room by room or renting out commercial premises without proper living facilities.

http://www.landlordtoday.co.uk/news_features/Illegal-subletting-warning

Rogue Landlords to be banned

MPs call for rogue landlord ban

Tuesday 1st July 2014

A new cross-party report has suggested nationwide banning orders for bad landlords, a national licence for landlords, plus a guide for tenants on renting a property in order to tackle problems in the private rented sector.

The report entitled “Creating a better private rented sector” was published by the All Party Parliamentary Group on Friday. It suggested a full review of the PRS regulatory system to check its fit for purpose.

The Residential Landlords Association (RLA) welcomed aspects of the report which it says “highlights the need for better enforcement by local authorities of the wide range of powers they already have to enforce standards.”

The RLA argues that the report rightly details pragmatic solutions such as civil penalties and banning orders to prevent criminal landlords from operating, together with a call for a clearer definition of what constitutes a “fit and proper” person to rent out properties.

On the subject of landlord registration, the report rightly proposes that the Government should look at the barriers preventing the use of landlords contact details already available through statutory tenancy deposit schemes or to local authorities rather than creating a vast new bureaucracy.

http://www.landlordtoday.co.uk/news_features/MPs-call-for-rogue-landlord-ban