Almost 54% of Southampton voters voted to leave

Southampton voters voted inline with the rest of the UK and helped the Brexit vote get over the line in Thursdays referendum, so what now..

Well in the immediate aftermath of the decision stock markets crashed and the pound slumped, Cameron resigned and Corbyn is now under massive pressure and we have been left in a huge vacuum both politically and economically. There will be no new Prime Minister until the Autumn and hence the Article 50 will not be invoked so this uncertainty will remain for some time and may well push through for a number of years while the UK finds its feet outside Europe.

So how is the property market going to perform over the next few months... Well unfortunately a major element of the success of any property market is confidence and at the moment the high level of uncertainty has eroded a significant level of that confidence, no one really knows how things will pan out and until we get clarity confidence will remain low. If you are considering selling your property it would be prudent to hold fire for a few months to hopefully let confidence come back. If your property is currently on the market it may well sit there for a number of months and you may want to consider taking it off the market. If you have to sell you may need to consider a price reduction to get it away and therein may lie the problem!

The market was very strong up until the end of March when the new stamp duty laws came into place. Since then the Southampton market has been sticky, some stock is on the market for 5 or 6 months and may well be compromised in a number of ways, it didn't sell prior to March and definitely wont sell now unless we see a price reduction. My fear is that this stock may be discounted to shift it and people who have to sell now will also have to discount to get it away and hence prices may fall, by how much ... maybe 10 or 15% over the next 12 months! Clearly there will be good opportunities to buy stock but choose carefully and be wary of grabbing the "falling knife"!

As I continually say Buy 2 Let is a long term investment - 10 to 15 years, it is not a get rich quick scheme. The Southampton property market has recovered well since the financial crises in 2008 when the market fell by 20%, we are now about 12% above the 2007 peak so our market is robust, has recovered well and is well placed to deal with the challenges ahead. Tenant demand is strong and will continue to be despite the leave vote. Since 2007 the UK has needed 250,000 new homes every year and we have only been building 120,000 hence the level of pent up demand and the housing crises, whether we are in or out of Europe this was never going to change.

So my advice is to keep your head, don't panic and wait for the level of uncertainty to reduce and plans to be put in place which should help build confidence back into our housing market and remember investing in the buy 2 let market is a long term investment. Stay positive and find the opportunities.

‘REMAIN’ OR ‘BREXIT’ IS NOT THE REAL PROBLEM … IT’S HOUSING

Buy-to-let property investors are spending too much time worrying about the effect of the EU referendum on the UK lettings market because there are far more dangerous factors threatening UK housing.

There are just not enough properties for rent in the UK to satisfy tenant demand - and that fundamental priority will remain unchanged by the referendum. The number of rental properties throughout the UK has been falling year on year and, nationally, stock figures are currently five per cent down over the same period in 2015.

The referendum is causing uncertainty both for home buyers looking to buy properties and landlords looking to invest in properties but this is making no difference to tenant demand which remains extremely strong.

The real problem lies in a poor government strategy that has been worsened by two blunders hitting the number of people buying new properties to rent and the number of landlords investing in more properties.

·         The FIRST - was hiking up the rate of stamp duty for buy-to-let investors.

This “government interference in a free market” caused a rush on mortgages, earlier this year, as investors pushed 45,000 purchase deals through before the new rates kicked in and caused a rocketing 163% distortion in buy-to-let mortgage lending.

·         And SECOND was the change in mortgage interest tax relief - which delivered a second body blow to landlords.

The result of introducing these added expenses for landlords looks like slowing down the market in the second half of the year and putting a further brake on the number of rented properties available.

The Government should be incentivising landlords to increase the national housing stock, but if you choke off the supply of rented homes then property prices will rise and rents are likely to be forced up by a more aggressive three per cent before the end of the year. For the last 20 years’ landlords have been plugging the gap in the housing market caused by the disappearance of council houses, from 3.5 million to 1.6 million, and the slow growth of new replacement social housing. And, while the government still fails to address the imbalance, the declining availability of homes for rent is becoming a crisis issue.

The housing crisis is a real problem – and one that the EU referendum will not change, I hope that an aggressive Government plan to build more housing, especially social housing, and serious consideration given to reversing landlord tax changes will undo some of the recent damage to the private rented sector and increase the future supply of rented homes which are desperately needed by 10 million tenants across the UK and more directly here in Southampton

UK rents rise 4.4%in the last 12 months

• Rents continue to rise over three months to May 2016 though increases slow more in line with house price growth
• Average rent in the UK (excluding Greater London) is now £771 per month,4.4% higher than a year ago; average rent in London now £1,563, up 6.2%
• Scotland leads the way with rents rising faster than in any other part of the country

Rents across the UK continued to rise during May, but the rate of increase has slowed somewhat in recent months, the May HomeLet Rental Index reveals. The index, the most comprehensive data available on the UK’s private rental market, reveals that rents agreed on new tenancies across the UK over the three months to the end of May were up by 4.4 per cent compared to the same period of 2015. That compares to an annual increase of 5.1 per cent in April and 7.6 per cent in May last year.

The May data from the HomeLet Rental Index will provide some encouragement for both landlords and tenants.

Landlords may have been expecting some impact from the increase in the supply of rental property in May, as those who rushed to complete buy-to-let property purchases before higher rates of stamp duty came into force on 6 April 2016 began offering their properties to tenants. HomeLet’s data suggests landlords continue to enjoy healthy rental yields after costs.

As for tenants, they will be encouraged to see the pace of rent rises now beginning to moderate, particularly compared to a year ago. While an average rise of 4.4 per cent means increases are still running ahead of inflation, there is some evidence of moderation of the long term trend, perhaps as affordability ceilings are approached.

The slowing of the pace of rent rises in May is broadly in line with a similar cooling in the rate at which house prices are rising – and may be part of a broader story about economic uncertainty ahead of this month’s referendum on the UK’ s membership of the European Union.

Nevertheless, the May 2016 HomeLet Rental Index reveals that rents continue to rise in almost every area of the country, with 11 out of the 12 regions surveyed seeing an increase over the three months to the end of May.

In Scotland, rents are currently rising faster than anywhere else in the UK, with new tenancies costing 10.6 per cent more than in the same period a year ago. However, East Midlands, registering a rise of 8.3 per cent in rents compared to last year, is also showing strong gains. London’s rental market, where the average rent on a new tenancy is now £1,563, up 6.2 per cent, also continues to see rents rise more quickly than in most other areas of the country.

Commenting on the report, Martin Totty, Barbon* Insurance Group’s Chief Executive Officer, said:
“The May HomeLet Rental Index continues to show a rental market characterised by steady growth in rents as the number of tenants looking for property runs ahead of the supply in the market – that remains the picture in most regions of the country. While this growth has begun to slow, which tenants will welcome, landlords will also be encouraged by the vote of confidence in the sector evidenced by the increase in Buy to Let completions in the past few months.

“Short-term factors can and do have an impact on the marketplace – as a market leader in tenant referencing, HomeLet has seen a noticeable increase in the applications for new tenancies immediately after the rush to complete buy-to-let property purchases ahead of last month’s increase in stamp duty rates.

“Across the housing market, it may be that uncertainty ahead of this month’s European Union referendum vote is a factor – some people may even be choosing to rent rather than buy given the unpredictability of the outcome and its impact; as we saw at the time of the 2008 financial crisis, house prices and rents are not immune from wider economic shocks.

“However, looking beyond shorter-term factors, net population growth and the rising rate of employment remain the key demand-side drivers for residential property; they look set to continue to run ahead of public and private sector initiatives to increase supply and keep pace.” He concluded.

https://homelet.co.uk/news/article/Rent-rise-fears-eased-for-landlords-and-tenants

Are Southampton landlords and tenants unprotected by Client Money Protection?

At least one in five landlords and tenants are not protected by client money protection (CMP), new figures show.

Fresh research from YouGov, undertaken for SAFEagent, reveals that hundreds of pounds of landlord and tenants’ money held by letting agents are at risk because the funds are not protected by CMP.

Letting agents in the UK currently hold more than £2.7bn of landlord and tenants’ money in the form of rent and tenancy deposits, but at least 20% of landlords and tenants will not be able to recover their funds if an agent steals the cash or uses it fraudulently because their money is not protected under the CMP scheme.

With the research revealing that 61% of renters incorrectly believe their money is protected by law, the SAFEagent Awareness Week (6-10 June) kicks-off today hoping to highlight the importance of CMP for tenants and landords when letting through an agent.

Although mandatory CMP is now finally on the government’s agenda with amendments to the Housing and Planning Act, many consumers are still at risk, which is why SAFEagent is campaigning for full and mandatory CMP.

John Midgley, chair of SAFEagent, commented: “If an agent were to steal landlord or tenant money without CMP in place, there’s little chance of getting their money back.

“Would you use a travel agency who isn’t ABTA protected? Consumers who use agents without CMP in place are taking a massive risk.

“While we are finally getting closer to mandatory CMP, we aren't there yet.

“It is so important that tenants and landlords understand that the right to redress only goes so far, and they need to choose their agent wisely by asking if they are part of a CMP scheme before signing on the dotted line.”

Discover the benefits for landlords and tenants of renting or letting through a registered SAFEagent.

https://www.landlordtoday.co.uk/breaking-news/2016/6/one-in-five-landlords-and-tenants-unprotected-by-cmp

28 per cent of house sales fall through after offers are accepted

Almost three in 10 buyers have seen their house purchase fall through after making an offer - typically leaving them almost £3,000 out of pocket as a result.

A survey by Which Mortgage Advisers of 2,000 homebuyers - each of which bought their home in the previous two years - found that it takes over four months on average, from starting a property search to having an offer accepted. 

However, 28 per cent of purchases fell through after that point.

The main reasons for a property purchase falling through were the seller decided not to sell their home after all (accounting for 27 per cent of fall-throughs), the buyer pulling out as their own property sale had fallen through (21 percent), the buyer finding somewhere else to buy (21 percent), or being gazumped (again 21 percent).

Of those who had lost money and knew how much they were out of pocket, the average loss was £2,899. 

This included conveyancing, survey, mortgage valuation or brokerage fees; these could not be recovered after the fall-through.
https://www.estateagenttoday.co.uk/breaking-news/2016/6/28-per-cent-of-house-sale-fall-through-after-offer