Search This Blog

Friday 30 October 2015

Average UK house about to hit £200,000

House prices edged up by an average 0.6 per cent across the UK last month according to the Nationwide, bringing a typical home’s cost to £196,807.
Prices have now risen by an average of 3.9 per cent over the past 12 months.
“Over the past five months’ annual price growth has remained in a fairly narrow range between 3.0 per cent and 4.0 per cent, broadly consistent with earnings growth over the longer term. While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand” cautions Robert Gardner, Nationwide's chief economist. 

Casting an eye to next year, he says that as a result of the popularity of fixed rate mortgages the proportion of outstanding mortgages on variable interest rates has declined steadily, from almost 70 per cent in mid-2012 to almost half now. “This should help to insulate many households from the impact of higher interest rates” he says. 
“The housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape.”

Earlier this week the Land Registry’s figures for England and Wales showed prices up 5.3 per cent over the past year - but with transactions around 10 per cent lower now than in autumn 2014.

Average Rents increase 2.7%

British renters are paying 2.7% more for their homes than a year ago, according to data from the Office for National Statistics (ONS).

The official figures show tenants in London are facing annual price hikes of 4.1%.
However, as the ONS noted: “This headline figure hides considerable regional variation: while all English regions experienced stronger rental price growth in the year to September 2015 than in the year to September 2014, annual growth in Wales and Scotland slowed.”

Tenants in England are now paying 2.8% more than in September 2014. Excluding London means the figure falls to 1.9%. In the south-east and east of England, rents rose by 2.7% over the year to September, while in the north-east they were up by just 0.5%. In Scotland, rents rose by 1.6%, while in Wales they were up by 0.5%.
The full report can be found here:

Thursday 29 October 2015

Freehold house yields 5.7% available at £190k

This 2 bed end of terrace house as just come on the market at £190k. It is well located just off Shirley Rd and is less than a mile to Southampton Central train station. It has had a good make over and benefits from 2 good sized bedrooms, an upstairs bathroom and a new kitchen. The property will attract a wide tenant pool and will let at £900pcm. This will give a gross yield of 5.7% based on asking price. The only drawback is no off road parking but I don't think that will deter purchasers and I fell the unit will sell quickly

Wednesday 28 October 2015

How EU Migration has changed the Southampton Property Market

The argument of migration and what it does, or doesn't do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Southampton Property market.

Before we look at Southampton though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

In Southampton and surrounding towns such as Chandler’s Ford, migration has risen over the last few years. For example, in 2009 there were 3,301 migrant national Insurance cards (NIC) issued and the year after in 2010, 3,691 NIC cards were issued. However, in 2014, this had increased to 4,797 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Southampton property market; it couldn’t fail to because of the additional 40,636 working age migrants that have moved into the Southampton area since 2005. However, it has not been the main influence on the market. Property values in Southampton today are only 5.5% higher than they were in 2005. According to the Office of National Statistics, rents for tenants in the South East have only grown on average by 0.95% a year since 2005 .... I would say if it wasn't for the migrants, we would be in a far worse position when it came to the Southampton property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period!

Supply drought means big price rises in 2016 and 2017 says forecast

The limited supply of homes means average property prices will rise 3.5 per cent next year and a further 4.2 per cent in 2017.
The forecast - from the Centre for Economics and Business Research - is accompanied by suggestions of market incentives that could encourage people to move to smaller ‘right-sized’ homes and to persuade older owner-occupiers to move and so increase stock coming to the open market. 
CEBR says historically one of the chief reasons for homes coming to the market was because younger owners ‘moved up’ but the price difference between a terraced house and a purpose-built flat - a typical younger person's property move - has boomed in some regions, notably London. 
CEBR says in 2000 this price difference stood at £46,000, but has nearly quadrupled to £176,000 now.

"A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK. This is a result of low levels of housebuilding, but also other factors such as an ageing population and the rising cost of moving up the property ladder” says CEBR researcher Nina Skero.
"The price gap between a first-time home and a larger family home has sky-rocketed in some regions, such as London, curbing activity in the housing market. For many, the rungs of the property ladder are moving further apart, making it impossible to upsize". 

Thursday 22 October 2015

Lenders unleash series of buy-to-let deals

The buy-to-let mortgage market is on course for a busy end to a successful year as lenders jostle to bring more products to market.
Aldermore Bank, Coventry Building Society and 3mc have all unveiled new mortgage rates for landlords.

Aldermore has released a new limited edition buy-to let remortgage product which includes its lowest ever five-year buy-to-let fixed rate. Its range includes five-year fixed rates from 3.99 up to 80% LTV, with the rental calculation based on the product pay rate. It has also reduced its reversion fees by 1% and introduced free legal fees on its standard range. This product is available to new business applications across Aldermore’s standard and specialist buy-to-let ranges and carries a 1.50% completion fee.

Group managing director Charles Haresnape said: “There has never been a better time to take advantage of historic low interest rates, and our new limited edition offering is available on a first come first served basis.”

Coventry Building Society has enhanced its five-year buy-to-let range for mortgages to include a deal charging 3.35% to 65% LTV. The mortgage is booking fee free and includes a valuation of up to £700. The deal has early repayment charges of 5% to 31.01.17, 3% to 31.01.19 and 1% until 31.01.21.

Cheshire-based national packager and mortgage club 3mc has announced that it is trialling Foundation Home Loans’ (FHL) new limited company buy-to-let product, ahead of a formal launch in November. The product covers a range of six fixed-rate options over two, three and five years starting at 4.19% for two years up to 65% LTV. Features include as allowing clients to purchase an existing property in a company name using a director’s loan.

Doug Hall, managing director at 3mc, said that a limited company buy-to-let is already an important option for landlords.

“The effect of the Chancellor’s move to restrict tax relief will accelerate the need for more established landlords to look carefully at how they best manage their portfolios in a way that continues to maximise rental yields and minimise costs.

Tuesday 20 October 2015

Government confirms Right To Rent from February 1st

Right To Rent checks will become mandatory in England from February 1st, the government has announced.

Under the new rules, landlords who fail to check a potential tenant’s ‘Right to Rent’ will face penalties of up to £3,000 per tenant.

The new law will mean that private landlords, including those who sub-let or take in lodgers, must check the right of prospective tenants to be in the country to avoid being hit with a penalty.

Right to Rent was introduced in the Immigration Act 2014 as part of the government’s reforms to build a fairer and more effective immigration system.

The first phase was launched in parts of the West Midlands and caused controversy from many industry players who saw it as a move by the government to ask landlords and letting agents to act, effectively, as border control.

Immigration Minister James Brokenshire says the phased introduction of Right to Rent, starting in the West Midlands, was to allow time to assess how the measures work in practice and to carry out an evaluation, which has also been published today.
A panel including the Equality and Human Rights Commission as well as representatives of landlords and letting agents, local authorities, and homelessness charity Crisis, has worked with government on the evaluation.

Under Right to Rent, landlords should check identity documents for all new tenants and take copies. This includes checking a UK passport, a European Economic Area passport or identity card, a permanent residence card or travel document showing indefinite leave to remain, a Home Office immigration status document or a certificate of registration or naturalisation as a British citizen. 

HMRC’s landlord campaign brings in more than £50 million

A campaign aimed at helping residential landlords get their tax affairs in order has brought in more than £50 million, according to HM Revenue and Customs (HMRC).
The Let Property Campaign, which HMRC launched in September 2013, is now one of the tax authority’s most successful voluntary disclosure opportunities.

More than 10,000 landlords have come forward to disclose tax on previously undeclared income under the campaign.

To help landlords further, HMRC has announced it will be running a Twitter Q&A from 6pm to 9pm on Tuesday 20 October 2015.

The Twitter Q&A will be run in partnership with a number of landlord professional bodies. These will each have 30 minutes to answer questions relating to wider aspects of renting out residential property, providing a one-stop shop for landlords to get rental advice throughout the evening.

HMRC’s section on tax is from 6pm to 7pm and hosted on @HMRCcustomers.
Caroline Addison, head of campaigns at HMRC, said: “The Let Property Campaign bringing in more than £50 million is further proof that our campaigns approach works. HMRCs 20 campaigns have now together generated over £1 billion across a variety of sectors.

“We want to help educate landlords, so the Twitter evening will give people a chance to get their questions answered by a group of expert organisations.”
Throughout the Let Property Campaign, HMRC has written to more than 80,000 landlords and more than 50,000 customers have used the campaign’s online educational products.