Property Investors Look for Life Beyond London

This article by Art Patnaude of The Wall Street Journal on October 30th, 2013 tells us that commercial real estate investors are scouring for London property market.

London's hot property market has commercial-real-estate investors scouring the rest of Britain.

Investors all but ignored cities like Manchester, Edinburgh and Birmingham while the U.K.'s economy faltered in the years after the financial crisis. They preferred the safety of London and its appeal for global buyers. But prices for office buildings and retail space have risen so much in the capital that returns on purchases are anemic.

A London property investor last month bought the site of Edinburgh's former Royal Infirmary. A complex of offices, hotels, apartments and shops is in the works. Murdo MacLeod for The Wall Street Journal.

 

Not so in the rest of the country, where even riskier development projects are proving to be a draw. Last month, London-based property investor Moorfield Group bought the site of Edinburgh's former Royal Infirmary for an undisclosed sum from Gladedale Capital, an Edinburgh-based developer. A complex of offices, hotels, apartments and shops is in the works. Development of the project, called Quartermile, stood still for much of the financial crisis.

In the past four months, real-estate investment firm Benson Elliot has spent £100 million on property in Manchester, Cambridge and the northern town of Preston.

The trend in the U.K. mirrors what has happened in the U.S. commercial-real-estate market in the wake of the financial crisis. Investors initially started buying trophy properties in the biggest markets with the most international appeal, like New York and Washington. As prices in those markets increased, demand has shifted to other cities such as Minneapolis and Denver.

Bold Move

London's property market has long benefited from the city's status as a global capital of finance and culture. Prices are stable, there is relatively strong demand from tenants, and foreign buyers like the stability of owning an asset denominated in Britain's currency.

London's appeal as a safe harbor rose during the financial crisis, and prices have continued to climb since then despite new construction. Increasingly, the city's lack of affordable options and low returns are turning investors' focus to areas they had largely ignored.

In 2012, deals outside London accounted for about 40% of all commercial property investment in the U.K. In the first half of this year, that figure edged up to nearly 50%, according to Savills, a real-estate services firm.

The largest deal in Leeds this year was the £29 million sale of the Toronto Square office complex. At the time of the sale in August, it was 20% vacant. With a net initial yield of 7%, "a year ago, this wouldn't have been an attractive proposition," said Clare Bailey, commercial property analyst at Savills.

High demand and low returns in London are "forcing people to see what can be done in the regions," said Edward Trevillion, head of real-estate research at fund manager Scottish Widows Investment Partnership, which manages £146 billion ($235 billion) of assets.

During the financial crisis, investors placed their bets in London, which is less subject to fluctuations in the U.K. economy. Many worried the economic downturn could hurt occupancy levels outside the capital.

Vacancy rates in U.K. offices jumped to 15.8% in 2009, after dropping as low as 7.1% in 2007, according to Savills. They are on the way back: Savills projects the rate to fall to 11.5% next year.

Investors looking for higher yields are focusing on places like Edinburgh, where a complex is being built on the site of the former Royal Infirmary. Scotsman/Zuma Press.

 

Confidence that a growing economy will help bolster businesses outside London has helped swing real-estate investment. While some regions are outperforming others, "all regions are sharing to some degree in the current U.K. economic recovery," said Richard Holt, regional economist at Capital Economics. The U.K. economy is expected to expand 1.5% this year, the firm projects; Scotland is expected to post 1.3% growth.

Peripheral cities is offer larger yields to commercial-property investors, who typically raise funds to buy a property and earn a yield on their investment through rents.

In London, rising prices have left yields low. In the city's financial district, the yield on office buildings peaked in January 2009 at 6.75%, not far under the 7% for property outside the capital, according to Savills. As of last month, the London yield had fallen to 4.75%; outside the capital it had only dropped to 5.75%.

Marc Gilbard, chief financial officer at Moorfield, which has £2 billion under management, said that while investors have pushed out to the regions before, this time around has been "particularly acute." That is partly due to foreign buyers seeking to buy real estate in central London as a place to park their money, he said.

There are others signs that money is flowing back outside London. Stephen Rees, head of real-estate advisory at Coutts, the private bank used by Queen Elizabeth, says competition for deals has stiffened.

On a recent commercial deal in Edinburgh, Mr. Rees—who was looking to buy the property on behalf of a wealthy client—said three of the four bidders were institutional investors. "I wasn't expecting that," Mr. Rees said. "That wouldn't have been the case the previous summer."

Investors say they still need to be cautious of occupancy levels, the reliability of tenants and the health of local economies. "You want that rent coming in every month," said Ainslie McLennan, fund manager for Henderson U.K. Property Unit Trust.

Basing an investment decision on U.K. economic-growth figures also needs to be more closely considered, said Marc Mogull, manager partner at Benson Elliot, which has €850 million of equity under management "You're not going to see fundamental growth in the regions like what you'll see in London," he said.

Article Source: http://online.wsj.com/news/articles/SB10001424052702303471004579163561521996776

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U.K. Mortgage Approvals Rise to Highest in 5 1/2 Years

This article by Scott Hamilton of Bloomberg on October 29th, 2013 tells us that on September mortgage approvals in UK rose to the highest level.

U.K. mortgage approvals rose to the highest in 5 1/2 years in September, adding to signs of a strengthening property market that’s being stoked by government incentives.

Lenders granted 66,735 mortgages, the most since February 2008, compared with a revised 63,396 the previous month, the Bank of England said in a report in London today.

Home-loan rates fell to a record low, and gross mortgage lending was 15.6 billion pounds ($25 billion), the highest since October 2008. 

Hometrack Ltd. said yesterday that house prices in England and Wales rose 3.1 percent in October from a year earlier, the biggest gain since 2007. Chancellor of the Exchequer George Osborne’s acceleration of his Help to Buy program this month is boosting real-estate activity and Hometrack said the gap between supply and demand is widening.

“The housing market is surging as low interest rates and rising confidence feed buyer interest,” said Rob Wood, an economist at Berenberg Bank in London. “It is early days, as real house prices and transactions are still below their pre-crisis levels. But the key issue is not where prices are today, rather it is where they will be in a couple of years. Prices and activity are rising fast.”

The September mortgage approvals figure exceeded economists’ forecasts. They predicted an increase to 66,000, based on the median of 23 estimates in a Bloomberg News survey. Net mortgage lending rose 1.03 billion pounds last month and consumer credit increased 411 million pounds, the BOE said.

Mortgage Rates

The BOE also reported that mortgage interest rates fell to a record low in September. The effective interest rate on all outstanding home loans fell 2 basis points to 3.3 percent. On new loans, the rate dropped 7 basis points to 3.08 percent.

Former Financial Services Authority Chairman Adair Turner has added his voice the critics of Osborne’s housing program, saying in an interview published yesterday that Britain risks repeating the debt-fueled binge that led to the credit crisis.

Despite government pledges to rebalance the economy away from consumer spending and the housing market, “we now seem to be having a recovery which is heavily focused on that favorite old British activity, which is another house price boom,” Turner said. “That’s not a sustainable, balanced economy.”

While mortgage lending is rising, approvals remain below their average of about 104,000 in the decade through 2007. BOE policy makers have cited that figure as they downplayed the risks from the housing market. Jon Cunliffe, who will join the BOE as deputy governor for financial stability next month, said on Oct. 15 that housing market is not overheating.

Corporate Lending 

Separately, the BOE said business lending rose 720 million pounds in September from August. While that compares with an average decline of 1.5 billion pounds over the previous six months, lending was still down 3.2 percent from the same month a year earlier, according to the data.

For small and medium-sized companies, lending fell 383 million pounds on the month and was down 3.2 percent versus a year earlier.

The pound remained lower against the dollar after the data and was trading at $1.6091 as of 10:28 a.m. London time, down 0.3 percent on the day. The yield on the benchmark 10-year U.K. government bond fell 1 basis point to 2.59 percent.

The BOE also said foreign investors bought a net 2.48 billion pounds of gilts in September. That followed a net sale of 6 billion pounds in August. It said M4, a broad measure of money supply, rose 0.6 percent in September from August and 2.6 percent from a year earlier.

To contact the reporter on this story: Scott Hamilton in London at
shamilton8@bloomberg.net
 
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Article Source: http://www.bloomberg.com/news/2013-10-29/u-k-mortgage-approvals-rise-to-highest-level-in-5-1-2-years.html 

House Prices Rising £200 a Day

This article by Sarah Westcott of the Express on October 28th, 2013 reveals how house prices have gone up by an average of 0.5% this month.

 
House prices have risen for the ninth month in a row [GETTY]
 

Homes across England and Wales are worth 3.1 per cent more than a year ago, says property analyst Hometrack.

In the past four weeks alone, the value of the average property has soared by £6,923, more than £200 a day.

A typical three-bedroom semi is now worth £252,418.

There is still such a shortage of supply – with buyers flooding the market thanks to the Government’s Help To Buy scheme – that sellers are almost always getting their asking price.

The proportion of the asking price achieved was 95.2 per cent in October, up from 94.7 per cent in September.

This is just half a percentage point off the record 95.7 per cent at the height of the property boom in 2007.

As the resurgence continues, Halifax has also revealed that a record seven out of 10 Britons think house prices will continue to go up over the next year.

The biggest increases are in London, up 0.8 per cent month-on-month with sellers typically achieving 97.2 per cent of their asking price.

 
The value of an average propery in the past four weeks has risen by £6,923 [GETTY]

Across the country, prices were up everywhere except the North-east.

The increases were 0.1 per cent in the East Midlands and the North-west, 0.2 per cent in Wales, Yorkshire and Humberside, 0.3 per cent in East Anglia and the West Midlands, 0.4 per cent in the South-west and 0.7 per cent in the South-east.

Help To Buy, which allows buyers to secure a mortgage with a five per cent deposit, is partly driving the boom.

The other factor is the shortage of properties for sale. This month new sales listings have dropped by 1.6 per cent, while buyers registering with estate agents were up by 2.0 per cent.

Richard Donnell, director of research at Hometrack, said there is a “chronic lack of supply”.

He added: “Growth in new sales being agreed is running at four to five per cent per month and this is continually eroding the stock of homes for sale. In contrast, levels of demand have grown. Improving confidence amongst buyers has been fuelled by low mortgage rates and positive news on a recovering housing market.”

The Halifax survey reveals that fewer than half (41 per cent) think it will be good to sell their property in the coming year, compared to 57 per cent who think it will be a good time to buy.

This indicates a continuing shortage of properties, forcing prices up.

 
The recent Help To Buy scheme is partially to blame for the increase in prices [GETTY]

Meanwhile, another report reveals parents are paying tens – and sometimes hundreds of thousands of pounds – over the odds to live near the country’s top state schools.

The average price of a home in the postal districts of England’s top 30 state secondary schools is £295,972, £31,500 more than those in neighbouring areas, Lloyds Bank found.

In London, parents desperate to get their children enrolled at Henrietta Barnett school in Barnet, north London, pay £400,000 more for homes up to £863,340 inside the catchment area, compared to £460,740 outside.

In Kingston upon Thames, south-west London, parents pay more than £600,000 – double the cost of average local homes – for children to be eligible for a place at Tiffin School for boys and Tiffin Girls’ School.

Nitesh Patel, of Lloyds, said demand had led prices to rocket “out of reach for many buyers on average earnings”.

Article Source: http://www.express.co.uk/news/property/439603/House-prices-rising-200-a-day

Details of Foreign Buyers of Property in London

This article by Property Wire on October 24th, 2013 reveals the large number of foreign buyers in London especially in prime property market according to new research from Knight Frank.

There has been a lot of talk about the huge number of overseas buyers in London, especially in the new build prime property market, but a new detailed analysis shows that only a small proportion do not live in the UK.
 
Of all £1 million plus prime central London new build sales in the 12 months to June 2013, just 28% were to buyers not resident in the UK, according to an analysis report from Knight Frank.

While most analysis to date has concentrated on the nationality of purchasers, this research focuses on a buyer’s residence. In a city as diverse and globally connected as London, where, for example, 38% of inner London residents were classified as foreign born in the 2011 census, this is perhaps more accurate when assessing foreign demand, the firm said.

The research reveals that over the 12 months to June 2013 49% of all £1 million plus sales in prime central London went to foreign buyers by nationality and the 28% who were not resident in the UK were mostly investors looking to earn an income by letting their properties to Londoners.

To understand the scale of international purchases across Greater London Knight Frank’s research team assessed a sample of 3,500 property titles for new build property purchased in the 24 months to June 2013. This involved developments in all 33 Greater London boroughs, with sales prices ranging from £200,000 to £5 million.

Residence of ownership was based on the proprietor record in each title from the Land Registry. Where there were companies or trusts the researchers took a view that with the exception of registered social landlords, or other obviously UK based entities, these records represented international purchasers.

The research found that 51% of new build purchases in the relatively small prime central London market were to UK residents over the past two years. Across the remainder of inner London the portion rises to 80%. In outer London, that is the remaining 19 boroughs, more than 93% of sales were to UK residents.

Overall the most number of foreign buyers come from Europe, the Middle East and Russia, the research also shows.

‘Our estimate is that over the past two years 85% to 90% of all new build purchases in Greater London have been to UK residents,’ said Liam Bailey, global head of residential research.

‘When we considered the two year period covered by our sample of new build sales records there was no indication of a shift towards higher non resident purchases over that period. While some developers have noted rising interest from overseas buyers in areas outside central London, these appear to be localised examples,’ explained Bailey.

‘Our research points to the fact that the majority of demand for new build property in London from overseas remains focussed on the relatively small and concentrated market made up of the central London postcodes,’ he added.

Article Source: http://www.propertywire.com/news/europe/london-international-buyer-research-201310248384.html

London Property Market Goes from Strength to Strength

This article by David Shuker of Prudential on October 23th, 2013 shows figures that property market in London is riding in the crest of a wave at the moment.

The London property market is currently riding the crest of a wave, with prices having risen dramatically in some boroughs over the last few weeks.

In Kensington and Chelsea and Westminster, for instance, asking prices have climbed by 12% in just one month.

What's more, prices in these boroughs have jumped by as much as 30% over the past year.

Miles Shipside of Rightmove remarked: "Some agents currently report a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.

"Unsurprisingly, many of this month's best performers are boroughs in inner London."

Earlier this month, the EY Item Club, one of the country's leading economic forecasters, said that there is minimal risk of another bubble developing in the UK housing market.

The body speculated that government schemes would lead to a 3.5% boost in houses prices this year and 6.6% in 2014.

Article Source: http://www.pru.co.uk/guides_tools/articles/801652378-London-property-/

Property Gives UK Tax Take A Huge Boost

This article by The Economic Voice on October 22nd, 20113 tells us that Land tax receipts up 30% over the last quarter.

Residential property transactions are fuelling a higher increase in tax revenues for the government, said London Chartered Accountants Blick Rothenberg LLP.

Monthly figures released today by HMRC show that the government’s tax take is up for yet another month and that residential property transactions are showing the largest rate of increase.

Frank Nash, a senior partner with the firm, said: “Stamp Duty is consistently pulling in over £800m a month for the last quarter. This is a watershed figure because it has never gone above this since 2008. This is as a direct result of residential property transactions.”

He added: “There have been over 200,000 residential property transactions alone in the last two months and a million in the last 12 months. There have been half a million transactions since the Governments Help to Buy Scheme (HTB) was put in place in (April). The last quarter’s home transactions are the largest for the last 5 years.”

Frank Nash said that the increase in tax take was being fuelled by an increased demand for property which combined with low interest rates, and on the supply side government incentives through the HTB scheme and de-regulation was boosting the residential property arena.

Frank Nash said: “The Government is lending new buyers a 20 percent deposit. This could fuel growth, inflation and house prices. It needs to be tempered and perhaps be a long-term rather than a short-term scheme. New buyers should have the same opportunities over a longer time scale.”

Nash said that there was was further good news because this probably means that consumer spending will increase (on ancillary housing items), and therefore increase the VAT take.

He added: “This highlights the importance of the property market for the UK economy in terms of its overall health.”


Article Source: http://www.economicvoice.com/property-gives-uk-tax-take-a-huge-boost/

'Unsustainable' 10% Surge in London House Prices Smashes Previous High Amid 'Buying Frenzy'

This article by Matt West of This is Money.co.uk reveals a report that showed house prices in London are rising in some regions but at below the rate of inflation.

House prices in London are rising at 'unsustainable levels with the average asking up now £30,000 higher than their previous July peak, a report showed today.

Property website Rightmove said the onset of autumn saw national average asking prices rebound by 2.8 per cent in October - reversing September's 2.8 per cent decline - and rise 3.8 per cent on the same time last year. The average property was worth £252,418, up almost £7,000 in a month from £245,495 in September, the website said.

But in London, after the summer lull saw a slight drop in properties being listed for sale and slight price falls, new seller numbers surged 15 per cent while asking prices shot up 10.2 per cent in October.

Patchy: House prices are rising in some regions but at below the rate of inflation while in other regions they have fallen

The average asking price in the capital is now 5.6 per cent or £28,852 above July’s record of £515,379, equivalent to an average growth rate of 2 per cent a month over the past quarter.

And with affordability in London stretched to near breaking point, Rightmove said the second phase of the Government’s Help to Buy scheme was likely to have little impact on the lives of ordinary Londoners. 

Buyers in the capital were already facing income challenges that would restrict their borrowing capabilities rather than difficulties finding a deposit, the website said.

Average prices in outer London of £461,937 are more than double those in the rest of England and Wales at £226,861. But average wages are around 60 per cent higher in the capital, meaning Londoners are struggling to service ever increasing mortgage debt.

Elsewhere in the country, two regions  - Wales and the West Midlands - recorded a fall in average prices in October. House prices in five other regions - the North, North West, Wales, West Midlands and the South West - remained lower than a year ago.

Rebound: After falling for two consecutive months during the summer lull, house prices have begun to rise again 

Seven in ten regions saw house price rises that lagged behind inflation. Only London, the South East and East Midlands saw house prices rise by more than retail price inflation of 3.2 per cent . 

The South East remains the natural recipient of increased demand given the extreme supply shortages in London.

Asking prices rose 2.3 per cent in October although they remained 2.1 per cent behind the peak of £330,612 achieved in July this year.

Rightmove director Miles Shipside said: 'Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3 per cent over August and September. 

'However, this month’s rebound in the number of sellers brings the quarterly growth figure back into line with the recent trend at around 2 per cent a month. 

'Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.

Capital trends: Some estate agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare

'Unsurprisingly, many of this month’s best performers are boroughs in inner London.'

He added London needed to see an increase in housing supply to meet heightened demand which would only come from more houses being built and more owners putting properties on the market. 

Rightmove said the situation in London was exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and creating upwards price pressure.

Mr Shipside said: 'London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one and two-bedroom flats to meet that demand. 

'While they can achieve volume sales at premium prices, this eats up a much-needed source of fresh supply and drags up existing property prices at an even faster rate.'

The Rightmove house price report is the latest in a long line showing significantly higher activity in the housing market.

Last week, the Council of Mortgage Lenders said lending in the three months to the end of September rose at the fastest rate in five years.

Prices

Article Source: http://www.thisismoney.co.uk/money/mortgageshome/article-2465958/London-property-market-seeing-buying-frenzy-says-Rightmove.html

MPC Member Plays Down Fear of Increase in Interest Rates

According to Ben Broadbent interest can rise continuously before homeowners may have difficulty paying their mortgages as revealed on this article by Delphine Strauss of FT Economy on October 21st, 2013.

 

Interest rates could rise significantly before UK homeowners found it difficult to meet mortgage repayments, Ben Broadbent, a member of the Bank of England’s Monetary Policy Committee, said on Sunday.

An upswing in the UK housing market has sparked fears that the government’s Help to Buy scheme – a combination of equity loans and guarantees for higher-risk mortgages – will help to inflate prices and burden people with debt they might later struggle to repay. 

However, the BoE’s Financial Policy Committee said last month that the housing market’s recovery did not pose a risk to financial stability, with activity still below its historical average and debt servicing costs low. 

“Although interest rates will at some point start to rise, you’ve got to remember quite how low a level we are starting from,” said Mr Broadbent in an interview on Sky News.
Although he said the BoE would not raise rates until the recovery was “on a secure footing”, he added: “I think there is a fair amount they could go up before borrowers got into great difficulties.”

Other MPC members take a similar view. Paul Tucker, the BoE’s outgoing deputy governor, told the Financial Times last week that the BoE did not need to address “every boom or boomlet”. His successor, Sir Jon Cunliffe, told a parliamentary committee: “From where I am now, it doesn’t look like we are in a bubble.” 

However, a survey published on Monday by Rightmove, the property website, underlines the divergence between a resurgent London property market and the more muted recovery seen in other parts of the country.

Asking prices in October were on average 13.8 per cent higher in Greater London than a year earlier, after fluctuating over the summer, Rightmove said, against an average national increase of 3.8 per cent.

The survey mirrors data published last week by the Office for National Statistics showing that house prices in London rose 8.7 per cent in the year to August, compared with a national rise of 3.8 per cent.

Article Source: http://www.ft.com/intl/cms/s/0/0d0c7148-3996-11e3-a3a4-00144feab7de.html#axzz2iJz6eRHW

Is the UK Moving from Property Ownership towards Property Rental?

This engaging article by Mark Benson of propertycommunity.com on October 17th, 2013 covers potential moving of UK's market from property ownership towards property rental as opposed to the US market.

Historically the UK property market has been dominated by home owner properties as opposed to rented properties which have often been the mainstay of markets such as the US. Ironically as the US market moves from a rental to an ownership market it seems as if the UK is moving in the opposite direction. Is this a fair reflection of the UK property market in the longer term or is this just a short-term blip?

The subject of property affordability is something which has been in the news in the UK for some time now and despite the concerns of MPs and influential bodies, the problem seems to be getting worse.

Employment mobility

One subject which is mentioned time and time again with regards to regional property markets is employment mobility and the fact that many people are willing and able to move at very short notice to employment opportunities at the other end of the country. This means that a growing number of individuals, couples and families are choosing to rent properties on a short to medium term basis rather than commit financially to the longer term.

Quote from PropertyForum.com : “Over the last 12 months there has been a significant increase in the cost of property across the UK and many people believe we are headed towards a house price bubble.”

Even though the UK economy is starting to pick up, the subject of employment mobility is one which occurs in both difficult as well as prosperous economic times. Therefore, as this phenomenon is almost certain to continue we can expect further interest in renting properties.

Affordability

It is common knowledge that many first-time buyers have been priced out of property sectors in many parts of the UK. While the UK government has brought in the Help To Buy scheme this is only likely to be a short-term fix and indeed in the medium to longer term it could make the situation even less attractive for first-time buyers. A report today also suggests that UK wages in real terms have hit a historic low which reflects the ever increasing cost of living against minimal wage increases. The longer this continues the larger the gap between what first-time buyers can afford and the price of starter properties in the UK.

Renting is fuelling property price rises

In a rather unfortunate phenomenon, the fact that fewer people are able to afford to buy properties is leading to an increased interest in renting which is in itself pushing property prices higher as landlords look to increase their property portfolios. This in turn means that more people are unable to afford their first property, pushing a larger number towards renting and the vicious circle continues!

In reality there is very little that the UK government can do aside from increasing the number of new property builds on an annual basis although in reality they are already tens of thousands if not hundreds of thousands of properties behind the curve. It seems almost inevitable that the ever increasing rush to rent property, for a variety of reasons, is going to make this situation even worse and many young couples in the future will have little or no chance of owning their own property outright.

Article Source: http://www.propertyforum.com/property-in-the-uk/is-the-uk-moving-from-property-ownership-towards-property-rental.html

Cranes point to upturn in city's property market

According to this article by Manchester Evening News on October 16th, 2013 Manchester now leads the property market and is soaring ahead of its regional rivals

Research by Deloitte Real Estate shows that 19 major new developments are underway in the city centre – compared to 13 in Birmingham and eight in Leeds.

Eight new residential developments, three new hotel developments, two student housing schemes and one new office development have contributed to Manchester’s growth, according to the Deloitte Crane Survey.

The new residential developments are around Salford, Ancoats and the Northern Quarter and between them add up to 963 new homes, the highest number under development in the central Manchester area since 2009.

The two new student housing schemes will add 1,246 new bedrooms.
Hotel development is already gathering speed – and expected to be one of the fastest growth areas in 2014, say the authors of the Crane Survey.


They report that 633 new hotel bedrooms are under construction. Four further hotel developments could add another 830 beds, with two of the projects likely to start on site imminently.

The office market is also improving, says Deloitte. The company says that 324,500 sq ft of new office space is under construction, half of which is already let to occupiers. Deloitte warns that the supply of new office space will soon run short.

The total under construction is well below the 480,000 sq ft averaged over the last ten years and so far no new developments are planned to complete construction work in 2015 or 2016.

Meanwhile, demand for office space is rising, with total take-up of all grades of city centre office space up 49 per cent in the first half of 2013.

Last year, they recorded just five developments for Manchester across all sectors.
The Deloitte report comes as other economic data points to an upswing in the fortunes of the city’s economy.

Earlier this week, the latest Lloyds Bank Commercial Banking North West PMI index revealed that levels of new business across the north west expanded for the eighth consecutive month in September.

Article Source: http://www.manchestereveningnews.co.uk/business/business-news/research-deloitte-real-estate-shows-6192874

Property Forecasts Predict A Positive Future For UK

This article by Les Calvert of property-abroad.com on October 15th, 2013 reveals the prediction of a positive future for UK property according to property forecasts.

With the property market outlook indicating a positive trend, we are in for a season of good growth forecasts. BNP Paribas' forecast for instance has recently predicted fairly impressive rental growth in just about every sector by 2016. The same forecast predicts 2015 as the best year for the office and retail sector with the prediction of a somewhat less than 12 percent return.

Current real estate situation 

The earlier forecasts have proven correct, and the trends seem likely to continue. The pricing and rental demand are forecast to grow because of the lack of occupational supply. In addition, further investments in the region around London will continue because of the inherent strengthen of the region.

Of the total UK investments so far, 47 percent has taken place in Central London alone which accounts for more than £12bn. Of this investment in total, nearly two thirds was invested in the office sector, while investment in mixed use asset constituted about 20 percent. In addition, the transaction volumes have been bolstered by overseas demand. 

Nearly 50 percent of investments in central London could be attributed to the buyers from outside the region, while the far eastern buyers contributed nearly one fifth of the total investment.

Foreign investors have also invested nearly one third of the investments made outside of London. The total investment outside London is nearly £14bn. North Americans, Middle Easterners and the Europeans are popular buyers in the UK property market.

Predictions for 2013

There are several predictions for the current year. It is expected that there will be a slight improvement in the total investment volume this year. Last year, it was £33.5bn, which could go up to around £35.5bn this year.

According to Claire Higgins, BNP Paribas Real Estate head, this year London is expected to finish its performance at the top level. The total returns from central London retail is expected to be highest this year at 13 percent, while city offices will most likely perform at around 8.7 percent with West End offices returning around 10 percent. The 2013 forecast for all property is likely to be 6.6 percent, while industrial return is expected to be 7.3 percent.

In other words, there is overall optimism for 2013 in real estate investment which it is expected will continue throughout the coming year ahead. At this rate it is expected that the peak of 2008 could possibly be surpassed shortly with much of the momentum building up in 2013.

Future forecasts 

The future forecasts indicate a bright prospect with the next five years up to 2017 leading to the national recovery. The other markets too will be driven to catch up with London. Strong returns are expected by the south-east offices. Shopping centers and logistics will follow the south east office sector closely.

The growth momentum comes from the U. K’s economic position which currently looks brighter and there is little likelihood of the momentum sliding back in the short term. The current growth trend of the U.K appears better than some other countries, while the output is yet to catch up with the peak of pre-recession years. However, the UK economy is still behind France, and other nations like U.S and Germany.

It may be interesting to note that between 2008 and 2013, the UK real estate industry claimed to be the third most productive. The first two were transport equipment followed by services.

Written by Les Calvert writer of Overseas Property news

Article Source: http://www.property-abroad.com/england/news-story/property-forecasts-predict-a-positive-future-for-uk-19317795/

Getting Returns from UK Property

This article by Sarah Davidson of Every Investor on October 14th, 2013 tells us how to gain returns from UK housing property investment.

Neil Hermon, fund manager of The Henderson Smaller Companies Investment Trust, argues the case for investing in smaller companies in the UK property sector.

“If you own a house the 2% rise in prices since last year and currently low mortgage rates are enough to help you sleep at night.

“If you are one of the unfortunate, mainly youthful, 17% of the population who rents from a private landlord, analogies about chasing the ends of rainbows will likely come to mind.

“Getting a foot on the ladder, it seems, is becoming an increasingly expensive business.

“Aside from foreign investment, the government is working hard to help. The Funding for Lending scheme, launched in July 2012, was originally designed to incentivise banks and building societies to boost their lending to the real economy.

“A key beneficiary of this has been the mortgage lending market, boosting supply and therefore reinvigorating the UK housing market. Enter the government once more this time with Help to Buy.

“Announced in April this year, the scheme was designed to aid first-time buyers by offering them a five year interest free equity stake of up to 20% for any new-build property worth up to £600,000. This means buyers only need a deposit of 5%. What is more, George Osborne has brought into effect phase two of the scheme which extends the offer to include any home bought by a first-time buyer.

“The effect? Property sector growth. First-time buyers account for over half of the mortgages approved in London, not too dissimilar from the rest of the country, and data by The Council of Mortgage Lenders shows they are borrowing 47% more than compared to a year ago.

“These growth drivers will generate promising investment opportunities within the UK property space.

“One company I am particularly excited about is LSL Property Services, whom I recently met following their annual results. Their business model is designed in such a way that enables them to generate revenue from a number of different avenues.

“They are the second largest operator of sstate agents in the UK running over 500 branches including brands such as Your Move and Marsh and Parsons. They are also the fourth largest broker of mortgage and non-investment insurance in the UK and finally, through e.surv, they own the UK’s largest surveying and valuations platform.

“They are also number one for asset management and property management services, executing all parts of the chain from repossession services and renovation, through to sale.

“The company is in a strong position to grow into a market leader in all lines of its business.

They have around £100m of financing available and management are approaching the available merger and acquisition opportunities sensibly. Combined with the top-down government drivers of Help to Buy and Funding for Lending, their future looks prosperous.

“UK housing is again an attractive investment proposition; you certainly would not have thought so in 2009 – how things have changed.”

Article Source: http://www.everyinvestor.co.uk/news/2013/10/14/viewpoint-getting-returns-uk-property-6290/

London Wealthy Leave for Country Life as Prices Rise

This article by Patrick Gower of Bloomberg on October 14th, 2013 reveals how wealthy left London to be living in a country life when house prices rise.

It took more than a year for Mark Hudson to find his six-bedroom home in the English countryside. Within weeks of moving in, he got a bid that topped the 1.75 million pounds ($2.8 million) the property cost.

“Somebody called offering a significantly higher sum,” said Hudson, a 55-year-old manager at a publishing company, who in August swapped his home in Clapham, a London district favored by young bankers and lawyers, for Dorset, the farm-dotted county 125 miles (202 kilometers) southwest of London that was the setting for Thomas Hardy’s Tess of the D’Urbervilles. “It looks like we caught it just at the right time,” he said.

Country homes are coming back into fashion, after lagging behind urban locations such as London’s West End since the 2007 financial crisis when banks cut off mortgages. Prices for manor houses, farmhouses and cottages valued at more than 750,000 pounds climbed at the fastest rate in more than three years in the third quarter, Knight Frank LLP said in a report today, as Prime Minister David Cameron makes reviving the housing market central to his efforts to pull the economy out of recession.

“It’s U.K. economic growth and broader housing-market confidence,” said Liam Bailey, global head of residential research at the London-based property broker.

The government last week introduced the second phase of its Help to Buy program, which offers mortgage guarantees that allow purchases with down payments as low as 5 percent. The first phase, which began in April, provided interest-free loans for buyers of newly built homes. The program has contributed to the strongest housing market since the financial crisis, even as two thirds of 31 economists surveyed by Bloomberg described it as “bad” policy.

Bigger Appetite 

“Help to Buy has obviously been a catalyst that has encouraged people,” Bailey said by phone. “It’s stimulated appetite to get into the market and that’s not only the lower-end first-time buyers -- it’s right through into the prime sector.”

In July, homebuyers took out 3,900 loans of 500,000 pounds or more, the most since September 2007, according to the Council of Mortgage Lenders. There’s also more willingness to lend at higher loan-to-value ratios, according to Henry Knight, managing director at mortgage broker Springtide Capital Ltd.
 
Two years ago, Barclays Plc (BARC)’s Woolwich unit, Nationwide Building Society and Lloyds Banking Group Plc (LLOY)’s Halifax “stopped agreeing mortgages for more than about 1 million pounds, but now they’ve moved up to 2 million pounds and some have gone to 3 million,” Knight said by phone. “There are just more lenders playing in that market now.”

Prime Country 

Knight Frank’s prime country-house index, based on data from the firm’s U.K. branches, shows that prices rose 0.8 percent in the third quarter from the previous three months. Gains were led by Virginia Water, Berkhamsted and Cobham, just outside London. Prices climbed 0.4 percent on an annual basis.

The measure includes manor houses, defined by Knight Frank as a large property standing in extensive grounds; farmhouses, which typically have six bedrooms and several acres of land including garden, paddock and barns; and cottages, which normally have four bedrooms and about an acre of land.

While demand for properties within commuting distance of London was strongest, prime country homes in every region of England climbed for the first time in two-and-a-half years during the quarter, according to a reported published by Savills Plc (SVS) last week.

“This is your last chance to buy before stock goes down and prices really start to rise,” Yolande Barnes, director of residential research at the London-based broker, said by phone.

Queen’s Castle 

Current offerings of theirs include Park Place, an eight-bedroom period house on the edge of Windsor Great Park with cottages and stables on about 15 acres. The property, about an hour’s walk from Queen Elizabeth II’s Windsor Castle and close to English private school Eton College, is priced at 20 million pounds.

Savills, along with Hamptons International, is also selling Bayfields Farm, a country house in Hampshire, about 30 miles from Highclere Castle, where TV show “Downton Abbey” is filmed, for 2 million pounds.

The value of U.K. luxury homes had plunged in the wake of the 2008 collapse of Lehman Brothers Holdings Inc. and the ensuing credit freeze and recession. Average prices of homes in London’s most expensive neighborhoods fell 25 percent in 2008, while those in the countryside fell 20 percent, Knight Frank’s Bailey said.

Mortgages of more than 500,000 pounds to home buyers dropped by almost 50 percent between 2007 and 2008, according to the Council of Mortgage Lenders.

Affluent Foreigners 

London’s property market began to recover in 2009, in part because of affluent foreigners seeking a haven from turmoil in the Middle East and the wider European debt crisis.

These buyers, attracted by mansions a short walk from Harrods and Buckingham Palace, helped push the price of luxury homes in central London up 23 percent since their last peak in Autumn 2007. Prices of prime country homes remain down 20 percent, according to Knight Frank.

Now the recovery is spreading beyond London. The number of homes sold in the U.K. reached the most in nearly four years in July, according to the Royal Institute of Chartered Surveyors. That helped push the value of prime country homes up for the third consecutive quarter, Knight Frank said. House prices in affluent areas about an hour from London climbed 1.6 percent during the three months, while those in the remainder of the south of England climbed 1.2 percent, according to Savills.

Homebuilders Rise 

U.K.’s homebuilders have been among the biggest beneficiaries of revived housing demand, with an index of the companies gaining 47 percent this year, compared with the 10 percent advance for the FTSE 100 Index. Persimmon Plc (PSN), the largest U.K. builder by market value, rose the most in almost two months on Oct. 9 after Goldman Sachs Group Inc. (GS) said the stock may increase by 70 percent within six months.

Homebuilders are increasing productivity to satisfy new demand, which may be a mixed blessing for country estates.

“Prices are moving up against a background of four years of low supply in the country-house market,” Bailey said. “If this positive sentiment pulls in more supply, that will hang a question mark over the sustainability of this growth.”

For Hudson, waiting to sell his London home proved fortunate as prices rose in the capital, while he said they fell last year where he was looking.

“You’d see a house listed and a few months later it would still be on the market and the price had dropped,” Hudson said. “When we finally bought it was more of a lifestyle choice, we were never sure it was going to be a good investment.”

After selling the home in Clapham for 1.3 million pounds, with an extra 475,000 pounds he could afford the six-bedroom country house with a cottage, swimming pool and eight acres of land.

“I had a feeling the time was right and London’s housing market was coming to a peak,” he said. “Maybe I was wrong on that point, because in fact that peak seems to go on getting higher and higher.”

Article Source: http://www.bloomberg.com/news/2013-10-13/london-wealthy-leave-for-country-life-as-prices-rise.html

Help to Buy Has No Safeguards to Ensure the North Feels the Benefit Too

This article by Graham Jones of The Northener Blog on October 10th, 2013 tells us that constituent's tax should not be used to give a leg-up to bankers who want a 95% mortgage on a £600,000 London townhouse.

This week the government launched the second part of the Help to Buy mortgage guarantee scheme – the means by which the state will guarantee 15% of the deposit on a mortgage.

The government claims this will help people who can't save for a deposit to get onto the housing ladder. Critics – everyone else from financiers to economists to housing specialists – claim it will create a new and unsustainable housing bubble; subprime lending that was the cause of the banking collapse.

For someone struggling to save, a reduced deposit is an easier route to home ownership.

But this has to be about more than one mortgage. It has to consider the cumulative impact and the colossal risks that brings to government finances should it all go wrong.

But the aspect of the policy I find particularly interesting is the huge and conflicting disparities between the housing markets in and around London, and much of the north of England; in particular in very low demand areas such as my constituency, Accrington. A quick glance at current average house prices on Prime Location shows a gigantic disparity between London (average price £491,000 – predicted to rise to £500,000 by the end of the year) and Lancashire (£141,000 to £157,000, depending exactly where).

The policy therefore runs the risk of pumping far more money into already super-heated housing markets in London simply by virtue of the cost of properties there. The policy has no mechanism to ensure a geographical allocation of the guarantees – there is nothing to prevent the majority of the £12bn being spent on fewer, more expensive mortgages.

Even in Lancashire this high bracket has seemingly perverse consequences – the £600,000 upper limit could purchase a very large property indeed. It is possible to buy five-bedroom properties with significant land with room for stables and horses. Should the hard-pressed taxpayer support the wealthy of Lancashire?

As the Guardian itself warned this week, City bankers were holding off buying a property and getting 95% mortgages instead in order to free up cash that would otherwise be locked into a property through the deposit. I do not think city bankers and those hoping to bump themselves up the ladder (up to a potential £600,000 house!) are particularly the people that we ought to be focusing on when it comes to housing aspiration – and it certainly wasn't the way the policy was sold to the public. My hard-pressed constituents are paying into a pool of money which could be being used to guarantee the mortgage of someone who gets very highly paid so they can buy a £600,000 house.

The reason we have low demand in East Lancashire is in part due to the economy, but that in turn is partly due to the housing market: we have an oversupply of houses that people don't want to live in (many of which as a result stand empty, boarded up). If the government wanted to improve the housing prospects of first-time buyers they would focus on building new houses across the country. £12bn to prop up mortgages could be spent to massively open up supply and build hundreds of thousands of new dwellings.

I hope this policy works for the people who take part in it, and anything that helps (or could help, as long as the budget isn't swallowed up on a smaller number of expensive properties) young people should be welcomed – however it is a short-term solution to the problem of undersupply of housing in parts of the country, and undersupply of quality properties in others.

My constituents' tax is being used to guarantee these mortgages – they ought to benefit from it (I hope the Treasury is at least monitoring where the money is going, though I am not optimistic). There are better policies the government could have pursued, but this is the one they chose – the least they could do is guarantee my constituents have an equal opportunity to take part.

• Graham Jones is the Labour MP for Haslingden and Hyndburn

Article Source: http://www.theguardian.com/uk-news/the-northerner/2013/oct/10/help-to-buy-scheme-north-safeguards

UK's RBS Denies Residential Property Sale Report

This article by 4-traders on October 9th, 2013 reveals a newspaper report that Britain's Royal Bank of Scotland denied in selling property portfolio.

(Reuters) - Britain's Royal Bank of Scotland on Wednesday denied a newspaper report it was planning to sell a portfolio of more than 1,300 UK residential properties owned by its property arm, and was considering floating them on the stock exchange. 

The Guardian newspaper said the properties were worth around 200 million pounds and owned by RBS through a subsidiary called West Register, which held assets valued at more than 3 billion pounds, mostly in the UK and Germany. 

"There are no plans to sell off a portfolio of properties or to float it on the stock exchange," a spokesman for state-backed RBS told Reuters.

The Guardian said the move would be seen as the creation of a mini "bad bank" and the offshoot would almost certainly form part of the potential bad bank that Chancellor George Osborne was considering hiving off from the rest of RBS.

Reuters reported in September that RBS could create an internal bad bank to house its problem loans, even if the government decided not to enforce its breakup.

(Reporting by Tasim Zahid in Bangalore; editing by David Evans)

Article Source: http://www.4-traders.com/news/UKs-RBS-denies-residential-property-sale-report--17338062/

One city's house price surge

This article by Kevin Peachey of BBC News Business on October 6th, 2013 reveals data from NBS that house prices has doubled in the past 10 years.

Two cities in the UK - one is a centre of commerce, has runaway house prices, and welcomes a constant stream of overseas property buyers. The other is London.

House prices in and around Aberdeen have more than doubled in the past 10 years, according to data from the Nationwide Building Society.

That increase is only matched by the trendy north London borough of Islington, and by Westminster in the heart of the capital of the UK.

Recent figures show that Scotland's third city is recording a fresh surge in property prices. One estate agent describes the area as a property force field.

"Everywhere outside is doom and gloom, but it is boom time here," says Brian Sutton, of James and George Collie solicitors and estate agents.

Silver city
 
Take a closer look at Aberdeen, and its picturesque, shimmering granite homes, and you can see the complexity of the UK property market.

The city has demand from first-time buyers willing to pay above valuation levels, interest from workers moving to the area, investors keen to get in on the act, and a lack of homes for sale.

All this pushes up prices. Yet, in Scotland as a whole, prices are only creeping up after years of stagnation.

It shows that averages can be misleading and that local areas can have very different trends to neighbouring regions, for reasons ranging from the quality of local schools to employment levels.

It also questions a widely held belief that the London property market is unique - that soaring prices in the south-east of England are unequalled in the rest of the country.

Oil money
 
At the mouth of Aberdeen Harbour, next to the fishermen's village of Footdee, is a landmark called the Roundhouse.

The Shoremaster's accounts for 1797-98 show that more than £225 was spent on the new house and telescope on the site.

Nowadays, first-time buyers in the city can expect to pay up to £140,000 for a one-bedroom flat, or up to £500,000 for a bigger property.

Competition for homes means many buyers are paying 5% to 10% over valuation at the moment, says Bill Barclay, partner at Raeburns solicitors and estate agents.
Often sales go to sealed bids, with first-timers stretching their savings to compete with buy-to-let investors.

Spend a few minutes standing by the harbour and the reason for this active property market is clear - North Sea oil.

"It drives the local economy," says Mr Barclay. "Big companies are making long-term financial plans for the area, so we are not going to see much changing."

Overheating market?

The area was not immune to the financial crisis. Banks were not lending at the levels they had been before 2008, but Mr Barclay says Glasgow and Edinburgh suffered much more.

Now, he says - using a phrase apt for an oil-producing region - the banks are "starting to open the taps" again to fund mortgages.

Figures published by the University of Aberdeen show a 25% increase in the volume of sales in the second quarter of the year compared with the same three months in 2011. Prices were up by 5.5% in the city and its suburbs over the same period.

Sales volumes of flats were up by 53% in that time, as buy-to-let investors find the finance and predict demand from tenants
.
All this is gloomy news for potential first-time buyers. One 32-year-old tells the BBC he has been renting on the south coast of England and then Aberdeen over the past 15 years and is unable to save anything close to what is needed as a deposit.

You hardly see a sale sign erected within the city's sought-after areas, with supply low and competition picking up. But the market is far from overheating, as it was in 2007, according to estate agent Brian Sutton.

"We had people in their early 20s buying property, with 10 to 20 bidding for one property. Competition has come back, but it is three to four people bidding," he says.

"First-time buyers are in their early 30s, not their 20s, often with their parents helping."

Bubble fears?

He predicts the housing market will continue to rise at a "sustainable rate", especially as the oil companies build headquarters in the area and continue to relocate staff to the region.  

Prices may grow by single figures year-on-year, he says, but nobody wants to return to the days of 20% a year increases.

Much the same point was made by Business Secretary Vince Cable when he raised concerns about a property bubble potentially being inflated by government schemes to kick-start the market.

"In London and the south east, in the north-east of Scotland, in other areas, there are serious housing inflationary pressures," he said.

Despite his warning, the second phase of the Help to Buy scheme has been brought forward by three months in England, and the Scottish government has announced the start of its own scheme.

The UK and Scottish governments both argue that Help to Buy, which includes allowing buyers to apply for a shared equity loan for part of the property, are vital to give people the chance to secure a mortgage from risk-averse lenders.

Buyers only qualify under the Scottish scheme if they are buying a newly built property.
Critics might argue that they should encourage the developers to follow the example of the fishermen's cottages at Footdee - where the front doors face inwards to protect occupants from incoming storms.

 Article Source: http://www.bbc.co.uk/news/business-24348196

Help to Buy: Let the Property Scramble Begin

This article by Rupert Jones of theguardian on October 5th, 2013 tells us the criticism from experts regarding the second part of the government's help to buy scheme.

A range of government-backed 95% mortgages are set to go on sale next week after ministers fired the starting gun on a new property scramble.

Two partially state-owned banks, Royal Bank of Scotland and the Lloyds Banking Group, will offer the loans initially, and millions of people will potentially be eligible to sign up.

Under the controversial Help to Buy scheme, homebuyers will only need to put down a 5% deposit – and it is open to existing owners as well as first-time buyers. What is more, there are no limits on how much you can earn and it applies to both old and new-build properties costing up to a generous £600,000.

RBS and its NatWest arm seem to think this second part of the Help to Buy scheme, which is being launched three months earlier than planned, has the potential to be the financial equivalent of the Harrods sale. They say customers will be able to visit any of their 2,000 branches or ring up, and add that opening hours will be extended at peak times "to help with customer demand".

Homebuyers were this week awaiting details of the deals – in particular, how attractive the pricing will be – amid speculation that the scheme could push down rates on 95% mortgages from their current levels of between 5% and 6% to perhaps as low as 4.5%, as well as increasing the choice of products available. That could lop almost £100 a month off the typical payments of someone taking out a £160,000 mortgage.

RBS and NatWest say they will offer "a range of competitive 95% mortgages" to first- and next-time buyers. These will initially be available in branches and over the telephone, and later via mortgage brokers. Halifax, part of the Lloyds group, will also be offering deals from launch; these will be available via branches and brokers. Lloyds Bank will participate from January, while other lenders such as Santander and Nationwide have yet to confirm whether they will take part.

While the scheme won't become fully operational until January, people will be able to start applying from next week, and once their mortgage is approved the funds will be available straightaway – they won't have to wait until the new year to complete on their home purchase.

There has been fierce debate about whether the scheme will hand a vital lifeline to homebuyers or simply drive house prices even higher, but what is undeniable is that this is a huge and potentially risky venture for the government. It is partially guaranteeing £130bn of low-deposit mortgages, which ministers have claimed could translate into assistance for well in excess of 500,000 homebuyers over three years.

That is a lot of people potentially being helped but, even so, there are fears demand could massively exceed supply. Santander issued research yesterday claiming 10% of Britons – equivalent to 5.1 million people – believe they are likely to buy a property in the next 12 months. A third of these, 1.7 million, said they planned to use Help to Buy.

In reality, some of these people would be locked out of the scheme because, for example, they are buying a property to rent out, or a second home, both of which are excluded from Help to Buy, or they don't meet the requirements on income and past credit history – but this still suggests that fears of a stampede of applicants may not be misplaced.

Phase two of Help to Buy is about encouraging banks and building societies to offer more mortgages that only require a small deposit (at least 5%) by giving them the opportunity to buy a guarantee on the "top slice" of the home loan – the bit between 80% and 95%. If a borrower gets into financial difficulty and their property is repossessed, the government will cover a chunk of the lender's losses.

Ministers are making available £12bn of guarantees to lenders, but the latter will have to pay a fee for each mortgage underwritten.

The scheme has come in for harsh criticism from some commentators. On Thursday, Howard Archer, chief UK economist at IHS Global Insight, warned: "There is a mounting danger that house prices could really take off over the coming months." He was speaking after figures from Halifax revealed that house prices are rising at their fastest annual pace for more than three years.

• A free Help to Buy show is taking place today (5 October) at the Glow events venue at the Bluewater shopping centre, Kent, between 10am and 4pm. The event is aimed at people in Essex, Kent, Sussex and south London. Go to glowbluewater.co.uk for more.

Article Source: http://www.theguardian.com/money/2013/oct/05/help-to-buy-property-scramble

The Cost of Renting in the UK is Nearly at a Record High

This article by the Landlord Expert on October 4th, 2013 tells us that private rents are just £1 short of record highs as an effect of rising house prices on rental market.

The lettings network LSL Property Services said rents had reached their second highest level since 2008 - largely because of a shortage of property to buy as Government schemes help people onto the ladder.

LSL, which owns the Your Move and Reeds Rains chains, reported that at £743 on average, monthly rents in August were just £1 less than the all-time high recorded in October 2012.

The pace of rent increases stepped up to 0.7% month-on-month in August.

It said rents were 1.3% higher across England and Wales than a year ago - less than half the rate of inflation - but London's rental market was soaring.

At £1,126 typically, rents in the capital have risen at a much faster rate than inflation and are up by 4.8% year-on-year.

Earlier this week, official figures showed that house prices in London were up by nearly 10% year-on-year , indicating the strength of demand.

Wales saw the second biggest annual increase in rents, with a 2.3% uplift taking average rents to £561.

The South East recorded the strongest month-on-month growth, with a 2% rise pushing monthly rents to £762.

By contrast, rents in Yorkshire and the Humber are 1.6% lower than last year, at £536 typically, followed closely by a 1.5% annual fall in the North West, taking average rents to £582.

The North East saw the biggest month-on-month drop in rents, with a 0.8% fall taking average rents to £523.

Across the country, rental inflation had been cooling off for much of this year following the launch of Government schemes to give people with low deposits a chance to buy.

First-time buyer numbers have reached their highest levels in more than five years following the initiatives such as Funding for Lending and Help to Buy, which have widened access to mortgages and allowed some people who were previously trapped in renting to break free.

But David Newnes, director of LSL Property Services, said that weak income growth, which has an impact on households' ability to borrow, and a lack of housing supply meant that the private rental sector was continuing to see strong demand from new tenants.

Mr Newnes said: "Better availability of finance has allowed some households to leave the rental market. And rents certainly felt the short-term impact of that.

"But releasing a blast of pent-up pressure to buy a home is unlikely to change the long-term trend in renting.

"Although Government schemes are helping, buying a first home is still extremely hard on the back of low salary growth."

 Article Source: http://www.landlordexpert.co.uk/index.php/news-centre/6222.html