This article by Amanda Banks of Tax-News Global Tax News on November 5th, 2013 reveals George Osborne has declined to reports confirming that the govt. is considering moves to foreign investors.
UK Chancellor George Osborne has declined to confirm reports that the
Government is considering moves to make foreign investors pay Capital
Gains Tax on property sales in Britain, as a measure to calm property
prices in London.
Asked by the BBC, Osborne said that he would not comment ahead of
next month's Autumn Statement, but that the reports were "not a leak
that's come from anyone near me."
Currently, foreign investors are exempt from paying the tax, which is
imposed on UK residents who sell a property that is not their main
residence. The exemption has been described as an "extraordinary
anomaly" by Vince Cable, who is the Government's Business Secretary
and a member of the Coalition Government's junior partner, the Liberal
Democrats.
Lucian Cook, who is Director of Residential Research at estate agency
Savills, judged that move would be a "much more targeted and much less
controversial solution" to property prices than a proposed Mansion Tax
on the most valuable properties. However, the British Property
Federation (BPF) reacted by warning that reports about the tax would
cause uncertainty, and it has instead called for more homes to be
built.
Estate Agency Frank Knight was quoted as saying that around 70
percent of the most expensive new London properties have gone to
foreign investors, and that 65 percent of these buyers were buying
properties for renting out rather than to live in. Property prices in
London rose by 9 percent in August, against a national average of 2
percent.
Overseas purchasers are also thought to be responsible for house
prices rises in Hong Kong, Sydney, and Vancouver. Last year, Hong Kong
introduced a 15 percent stamp duty surcharge on purchases by buyers
who are not permanent residents, while a senior banker in Australia
recently made news by suggesting a 5 percent stamp duty surcharge for
foreign buyers.
Article Source: http://www.tax-news.com/news/Osborne_Said_To_Be_Considering_Tax_For_Foreign_PropertyBuyers____62574.html
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Showing posts with label property prices. Show all posts
Showing posts with label property prices. Show all posts
Wednesday, 6 November 2013
Tuesday, 22 October 2013
'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.
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.
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.
Friday, 18 October 2013
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.
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
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
Friday, 4 October 2013
House Prices Up 6.2% in a Year as Demand Strengthens
This article by Michelle McGagh of citywire money on October 3rd, 2013 reveals the continued and steady rise upwards of house prices according to the figures from Halifax.
More sellers might be putting their houses on the market but the continued disparity between supply and demand means that house prices have increased another 2% in the past three months.
Halifax's house price index shows a 6.2% increase in UK property prices in the past year, pushing the average price of a home to £170,733.
Prices in September were up 0.3% on the previous month, the eight successive monthly price rise, although prices are still 14% off their 2007 peak.
The demand for property has been fuelled by the government’s Funding for Lending scheme and the successful implementation of the first part of the Help to Buy scheme.
Supply has lagged behind, meaning prices have ticked upwards, but it now looks like more homes are coming on to the market. According to the Royal Institution of Chartered Surveyors the number of people putting their property up for sale increased successively in the seven months to August.
The number of new homes being built has also increased and in the first six months of 2013 new building starts were 22% higher than the same period last year.
Martin Ellis, Halifax housing economist, said: ‘House demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy has begun a sustainable recovery.’
He added that ‘supply is beginning to respond to the pick up in demand’ which should help to ‘constrain prices’.
‘The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale.’
The figures come days after the prime minister announced the government was fast-tracking the second part of its Help to Buy scheme. The first part sees the government offer a five-year interest–free loan up to 20% of a new build property’s price if a buyer has a 5% deposit.
In the second part the government will guarantee 15% of the mortgage taken out on any property up to a total property price of £600,000. Again the buyer must have a 5% deposit.
The second part was not supposed to come into force until January but will now be up and running next week. Critics, including business secretary Vince Cable, have said the mortgage guarantees are not needed and will further fuel house price rises.
Article Source: http://www.citywire.co.uk/money/house-prices-up-6-2-in-a-year-as-demand-strengthens/a707015?ref=citywire-money-latest-news-list
More sellers might be putting their houses on the market but the continued disparity between supply and demand means that house prices have increased another 2% in the past three months.
Halifax's house price index shows a 6.2% increase in UK property prices in the past year, pushing the average price of a home to £170,733.
Prices in September were up 0.3% on the previous month, the eight successive monthly price rise, although prices are still 14% off their 2007 peak.
The demand for property has been fuelled by the government’s Funding for Lending scheme and the successful implementation of the first part of the Help to Buy scheme.
Supply has lagged behind, meaning prices have ticked upwards, but it now looks like more homes are coming on to the market. According to the Royal Institution of Chartered Surveyors the number of people putting their property up for sale increased successively in the seven months to August.
The number of new homes being built has also increased and in the first six months of 2013 new building starts were 22% higher than the same period last year.
Martin Ellis, Halifax housing economist, said: ‘House demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy has begun a sustainable recovery.’
He added that ‘supply is beginning to respond to the pick up in demand’ which should help to ‘constrain prices’.
‘The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale.’
The figures come days after the prime minister announced the government was fast-tracking the second part of its Help to Buy scheme. The first part sees the government offer a five-year interest–free loan up to 20% of a new build property’s price if a buyer has a 5% deposit.
In the second part the government will guarantee 15% of the mortgage taken out on any property up to a total property price of £600,000. Again the buyer must have a 5% deposit.
The second part was not supposed to come into force until January but will now be up and running next week. Critics, including business secretary Vince Cable, have said the mortgage guarantees are not needed and will further fuel house price rises.
Article Source: http://www.citywire.co.uk/money/house-prices-up-6-2-in-a-year-as-demand-strengthens/a707015?ref=citywire-money-latest-news-list
Friday, 20 September 2013
London Fuels Record Growth in UK House Prices
English property prices pushed roaring demand for London housing more
than their peak at the height of the country's economic boom according
to this article by Ed Hammond, Kate Allen and Claire Jones of FT Adviser
on September 17th, 2013.
The
Bank of England’s Financial Policy Committee, which is responsible for
safeguarding financial stability, is on Wednesday expected to discuss
the housing market against the backdrop of warnings from policy makers
that the government’s mortgage guarantee schemes are fuelling nationwide
price growt.
Last week, the Royal Institution of Chartered Surveyors urged the BoE to curb the risk of another housing boom by taking the unprecedented measure of capping national house price growth to 5 per cent a year.
After stripping out the impact of London, however, average UK house prices rose just 0.8 per cent during the year, underlining the diverging economic fortunes between the capital and the wider UK housing market.
This divergence complicates the BoE’s new policy of “forward guidance” under which the FPC must confirm that ultra-low interest rates are not serving to undermine financial stability.
While it would be unlikely for the FPC to signal the end of forward guidance a little over a month after its introduction, the new policy heaps pressure on the FPC to explain why housing is not compromising financial stability.
To date policy makers have focused on a one-size fits all solution for the country.
“The difficulty is you have significant variations between London and the rest of the UK, so it is impossible to control pricing by manipulating the entire mortgage market,” said Lucian Cook, head of UK residential research at Savills, the property group. “All it will achieve is to create further polarisation between the equity-rich buyers and the debt-reliant market”.
The cost of an average London home hit £318,000 in the 12 months to July, according to the Nationwide, compared with £167,200 for the rest of the UK. The difference means the average London house is worth 1.9 times property elsewhere, eclipsing the 1987 peak of 1.75 times.
Analysts do not expect the FPC to announce measures to restrict activity in the mortgage market in its post-meeting statement next Wednesday. Mark Carney, governor of the BoE, last week played down concerns a housing bubble is inflating, while saying policy makers needed to remain “vigilant”.
“When looked at in the broadest terms, it is obvious that no agent of the government would wish to act at the current time to cool the housing recovery,” said Brian Hillard, economist at Société Générale. “What the Bank can do, however, is monitor the state of the housing recovery.”
The ONS index only includes transactions involving a mortgage – it
does not include cash-only purchases. A substantial proportion of sales
are now to cash buyers.
Roaring
demand for London housing has pushed English property prices beyond
their peak at the height of the country’s economic boom, official
figures showed on Tuesday, underscoring concerns of an impending
housing bubble.
House prices in the capital outpaced those in the
rest of the country by a factor of 10 times during the past year,
according to figures from the Office for National Statistics.
The jump helped lift the English average house price 3.7 per cent
during the 12 months to July to £255,000, surpassing the 2008 zenith.
Last week, the Royal Institution of Chartered Surveyors urged the BoE to curb the risk of another housing boom by taking the unprecedented measure of capping national house price growth to 5 per cent a year.
After stripping out the impact of London, however, average UK house prices rose just 0.8 per cent during the year, underlining the diverging economic fortunes between the capital and the wider UK housing market.
This divergence complicates the BoE’s new policy of “forward guidance” under which the FPC must confirm that ultra-low interest rates are not serving to undermine financial stability.
While it would be unlikely for the FPC to signal the end of forward guidance a little over a month after its introduction, the new policy heaps pressure on the FPC to explain why housing is not compromising financial stability.
To date policy makers have focused on a one-size fits all solution for the country.
“The difficulty is you have significant variations between London and the rest of the UK, so it is impossible to control pricing by manipulating the entire mortgage market,” said Lucian Cook, head of UK residential research at Savills, the property group. “All it will achieve is to create further polarisation between the equity-rich buyers and the debt-reliant market”.
The cost of an average London home hit £318,000 in the 12 months to July, according to the Nationwide, compared with £167,200 for the rest of the UK. The difference means the average London house is worth 1.9 times property elsewhere, eclipsing the 1987 peak of 1.75 times.
Analysts do not expect the FPC to announce measures to restrict activity in the mortgage market in its post-meeting statement next Wednesday. Mark Carney, governor of the BoE, last week played down concerns a housing bubble is inflating, while saying policy makers needed to remain “vigilant”.
“When looked at in the broadest terms, it is obvious that no agent of the government would wish to act at the current time to cool the housing recovery,” said Brian Hillard, economist at Société Générale. “What the Bank can do, however, is monitor the state of the housing recovery.”
Prices also rose in Northern Ireland, where the property market has been devastated in recent years. Average house prices fell in both Scotland and Wales, however.
The LSL/Acadametrics index, which includes sales
to cash buyers, showed a 3.2 per cent annual rate of growth in its most
recent figures. But other indices run by mortgage lenders, such as
Nationwide and Halifax, show prices are still substantially below their
2008 peak. House price indices have diverged in recent years, as methodological differences produce increasingly divergent results.
Article Source: http://www.ft.com/intl/cms/s/0/0d15ebae-1f8f-11e3-8861-00144feab7de.html#axzz2fPX03wcg
Friday, 13 September 2013
Bank of England Should Cap House Price Inflation
On this article by Reuters on September 13th, 2013 surveyors suggest
that to prevent another property bubble the bank should cap annual house
prices to 5%.
(Reuters) - The Royal Institution of Chartered Surveyors has called on the Bank to limit annual house price inflation to 5 percent to prevent another property bubble.
Such a policy, it says, could be implemented by imposing caps on loan-to-value ratios, loan-to-income ratios, or ceilings on the amount banks are permitted to lend.
The request - an unusual one from an industry group that typically benefits from rising prices - comes months before the government begins to offer mortgage guarantees to riskier homebuyers under its controversial "Help to Buy" scheme.
Property prices are already rising at more than 5 percent a year according to mortgage lender Halifax, and the RICS has joined a chorus of voices warning that price rises could become unsustainable.
Figures from LSL/Acadametrics on Friday showed a 30 percent rise in the number of first-time buyers.
"Sending a clear and simple statement to the public that the Bank will not tolerate house price rises above five percent would help restrict excessive price expectations across the country," the RICS report said.
"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."
The industry group notes that limits on property price inflation have been used by a variety of countries, including Canada between 2008 and 2012, when Bank Governor Mark Carney headed the country's central bank.
Under Carney's watch, Canada's national regulator the amount buyers could borrow in relation to their deposit and imposed more stringent credit checks - measures that appeared successful in bringing price inflation back down.
At a hearing before lawmakers on Thursday, Carney said that although Britain's central bank lacked formal powers to force banks to do the same, it could issue strong advice that they rein back lending.
However so far the Bank has not identified a bubble in house prices. Its Financial Policy Committee is charged with spotting risks building up the financial sector and acting to head them off.
(Reporting by Christina Fincher; editing by Ron Askew)
Article Source: http://uk.reuters.com/article/2013/09/13/uk-britain-housing-idUKBRE98B1BC20130913
(Reuters) - The Royal Institution of Chartered Surveyors has called on the Bank to limit annual house price inflation to 5 percent to prevent another property bubble.
Such a policy, it says, could be implemented by imposing caps on loan-to-value ratios, loan-to-income ratios, or ceilings on the amount banks are permitted to lend.
The request - an unusual one from an industry group that typically benefits from rising prices - comes months before the government begins to offer mortgage guarantees to riskier homebuyers under its controversial "Help to Buy" scheme.
Property prices are already rising at more than 5 percent a year according to mortgage lender Halifax, and the RICS has joined a chorus of voices warning that price rises could become unsustainable.
Figures from LSL/Acadametrics on Friday showed a 30 percent rise in the number of first-time buyers.
"Sending a clear and simple statement to the public that the Bank will not tolerate house price rises above five percent would help restrict excessive price expectations across the country," the RICS report said.
"This policy would discourage households from taking on excessive debt out of fear of missing out on a price boom, and discourage lenders from rushing to relax their lending standards as they compete for market share."
The industry group notes that limits on property price inflation have been used by a variety of countries, including Canada between 2008 and 2012, when Bank Governor Mark Carney headed the country's central bank.
Under Carney's watch, Canada's national regulator the amount buyers could borrow in relation to their deposit and imposed more stringent credit checks - measures that appeared successful in bringing price inflation back down.
At a hearing before lawmakers on Thursday, Carney said that although Britain's central bank lacked formal powers to force banks to do the same, it could issue strong advice that they rein back lending.
However so far the Bank has not identified a bubble in house prices. Its Financial Policy Committee is charged with spotting risks building up the financial sector and acting to head them off.
(Reporting by Christina Fincher; editing by Ron Askew)
Article Source: http://uk.reuters.com/article/2013/09/13/uk-britain-housing-idUKBRE98B1BC20130913
Thursday, 12 September 2013
Prime Property Prices in Central London Up 116% in Last 8 Years
Research shows that in the past 8 years prime Central London house
prices have more than doubled and it is up by 116% outpacing the RPI by
86%, according to this recent article on September 11th, 2013 of the
Property Wire.
Prime central London house prices have more than doubled in the past eight years, up by 116 and outpacing the Retail Price Index by 86%, new research shows.
By contrast the average UK property price is 19.3% down on the same period, according to the research from Savills which tracks the expansion of the market since its indices were launched in 1979 and analyses in detail the performance of different locations in the latest market cycle.
It shows that prime central London property prices have grown on average 4.9% per annum since 1979. This compares to just 3.6% above inflation across greater London and a UK average of 2.9%, opening the gap between prime London and the rest to its widest ever.
Mayfair tops the growth chart with growth of 139% since the middle of 2005, followed by Knightsbridge, Belgravia and Chelsea with growth of at least 128%. All are now at least 30% above peak.
The analysis points out that supply has failed to keep pace with demand, resulting in an expansion of prime London from its Belgravia core in the 1950s to a swathe that runs from Richmond in the south west to Islington in the north, from Chiswick in the west to Canary Wharf in the east.
‘London is seen as one of the premier world cities in which to both live and invest. London’s economy has been put at nearly a third the size of that of the whole of the UK. Like other global cities, London attracts capital from around the world,’ said Yolande Barnes, head of world residential research.
She pointed out that the demand catchment for London housing is therefore global and the appetite for investment remains strong. Also London is physically limited in size and by very low levels of new supply so real house prices have risen much faster than elsewhere.
‘London is a honey pot for wealthy real estate buyers but many of these buyers also live and work in London. It would seem that London’s housing market is inextricably tied with its economic success but it has been failing for some time to increase supply at a sufficient rate to curb price growth,’ explained Barnes.
This means that the lack of housing supply is playing out most visibly in London’s prime housing markets where the wealthiest home owners can compete most effectively for space.
Looking forward, the analysis suggests that the strength of outer London prime markets will be dictated by the creation of new wealth from the London economy and the flows of wealth between prime markets.
The report says that generally, over the next five years, London and the south east are expected to lead the economic recovery in the UK. In London, the economic growth from the all important financial and insurance sector is likely to be on a par with the average for the capital. The highest economic growth is forecast from the professional scientific and technical and information and communication sectors.
‘These sectors will, like financial services before them, also attract international investment and human capital which is expected to be reflected in overseas demand for housing. This is likely to widen the profile of buyers and support underlying housing demand for prime property beyond central London,’ it points out.
It also suggests that an increased proportion of prime demand is likely to be focused on the commuter zone given the gap between pricing in these markets and prime domestic London.
‘We expect to see a continued displacement of wealth from the prime central London markets into other parts of prime London and beyond. The markets in closest proximity to prime central London will see continued overseas buying activity, mainly from full time residents in the capital. This means the prime central London and other prime markets will remain linked,’ adds the report.
Article Source: http://www.propertywire.com/news/europe/london-prime-property-analysis-201309118224.html
Prime central London house prices have more than doubled in the past eight years, up by 116 and outpacing the Retail Price Index by 86%, new research shows.
By contrast the average UK property price is 19.3% down on the same period, according to the research from Savills which tracks the expansion of the market since its indices were launched in 1979 and analyses in detail the performance of different locations in the latest market cycle.
It shows that prime central London property prices have grown on average 4.9% per annum since 1979. This compares to just 3.6% above inflation across greater London and a UK average of 2.9%, opening the gap between prime London and the rest to its widest ever.
Mayfair tops the growth chart with growth of 139% since the middle of 2005, followed by Knightsbridge, Belgravia and Chelsea with growth of at least 128%. All are now at least 30% above peak.
The analysis points out that supply has failed to keep pace with demand, resulting in an expansion of prime London from its Belgravia core in the 1950s to a swathe that runs from Richmond in the south west to Islington in the north, from Chiswick in the west to Canary Wharf in the east.
‘London is seen as one of the premier world cities in which to both live and invest. London’s economy has been put at nearly a third the size of that of the whole of the UK. Like other global cities, London attracts capital from around the world,’ said Yolande Barnes, head of world residential research.
She pointed out that the demand catchment for London housing is therefore global and the appetite for investment remains strong. Also London is physically limited in size and by very low levels of new supply so real house prices have risen much faster than elsewhere.
‘London is a honey pot for wealthy real estate buyers but many of these buyers also live and work in London. It would seem that London’s housing market is inextricably tied with its economic success but it has been failing for some time to increase supply at a sufficient rate to curb price growth,’ explained Barnes.
This means that the lack of housing supply is playing out most visibly in London’s prime housing markets where the wealthiest home owners can compete most effectively for space.
Looking forward, the analysis suggests that the strength of outer London prime markets will be dictated by the creation of new wealth from the London economy and the flows of wealth between prime markets.
The report says that generally, over the next five years, London and the south east are expected to lead the economic recovery in the UK. In London, the economic growth from the all important financial and insurance sector is likely to be on a par with the average for the capital. The highest economic growth is forecast from the professional scientific and technical and information and communication sectors.
‘These sectors will, like financial services before them, also attract international investment and human capital which is expected to be reflected in overseas demand for housing. This is likely to widen the profile of buyers and support underlying housing demand for prime property beyond central London,’ it points out.
It also suggests that an increased proportion of prime demand is likely to be focused on the commuter zone given the gap between pricing in these markets and prime domestic London.
‘We expect to see a continued displacement of wealth from the prime central London markets into other parts of prime London and beyond. The markets in closest proximity to prime central London will see continued overseas buying activity, mainly from full time residents in the capital. This means the prime central London and other prime markets will remain linked,’ adds the report.
Article Source: http://www.propertywire.com/news/europe/london-prime-property-analysis-201309118224.html
Monday, 9 September 2013
UK is Urged to Invest £50bn in a Greener Economic Recovery
For the sake of UK greener economic recovery, Green New Deal campaign group says £50bn should be spent on technology, cheap housing and insulating homes as revealed on this article by Heather Stewart of TheGurdian on September 8th, 2013.
Campaigners have warned that Britain is hurtling towards a new
economic crisis, and call for a £50bn "Green New Deal" to create more
sustainable growth and better-paid jobs and equip the country for a
low-carbon future.
After two quarters of better-than-expected GDP growth and a batch of positive economic indicators – including rising house prices and upbeat business surveys – the coalition is hoping the summer economic bounce will turn into a longer-term recovery. But five years on from their first demands for a radical reworking of Britain's business model, the Green New Deal group, which includes Green party MP Caroline Lucas, economist Ann Pettifor and tax expert Richard Murphy, says the need for an alternative approach is greater than ever. In a report published on Monday, and seen by the Observer, it argues that recent growth has been based on unsustainable rises in consumer spending and house prices and could end in "the mother of all credit busts".
"Recovery is an interesting word to apply to an economy that is marked by rapidly rising personal debt, highly insecure and often low-paid work, and rising underlying carbon emissions. What we're calling a recovery is poor, divided, indebted and polluting," said Andrew Simms, chief analyst at thinktank Global Witness and an author of the report.
Central banks have poured cheap money into financial markets to drive down interest rates and prevent deflation and depression. But Green New Deal says this is a dangerous gamble: "Given the choice, they prefer to have the problem of asset prices going through the roof than the problem of deflation. If they are wrong and the bubble bursts before the recovery arrives, it will be the mother of all credit busts," it says.
Under an alternative plan in the Green New Deal report, the government would invest £50bn into expanding green technologies over five years, building low-cost housing, and employing a "carbon army" to insulate hundreds of thousands of homes and reduce energy use.
The authors say these measures would create more, and better-paid, jobs than the current debt-fuelled bounce, which Pettifor described as an "Alice in Wongaland" recovery. Lucas, who is the MP for Brighton Pavilion, said a grassroots workforce could be trained to lag Britain's chilly lofts "within weeks". "Ministers want to cut a nice big ribbon on a new nuclear power station – but this would be far more effective in getting our emissions down quickly," she said.
Real incomes have continued to fall over the past year, as above-target inflation has outpaced pay growth, in what the TUC has described as the greatest wage squeeze since the 1870s. Green New Deal argues that if more workers were paid a living wage it would help to create more sustainable consumer demand. Frances O'Grady, the general secretary of the TUC, which begins its annual congress in Bournemouth on Sunday, supported the Green New Deal initiative, saying: "The green economy already employs nearly a million people, in areas from electric-car manufacturing to wind-turbine installation. Implementing some of the ideas in this report could help these industries create more of the skilled and well-paid jobs we need if we are to build a sustainable recovery."
The authors suggest their pro-growth policies could be paid for by scrapping the controversial HS2 rail project; cracking down on tax evasion; and launching a fresh round of quantitative easing.
Instead of using electronically created money to buy government bonds from City investors, as the Bank of England has done with almost all of the £375bn-worth of QE it has undertaken since 2009, the proceeds this time would be used to invest in green projects, and pay off private finance initiative debts, freeing up public money to be spent elsewhere.
The report argues that investing in affordable housing, in particular, would benefit those on lower incomes more than the better off. "It can mean that people have more disposable income after housing costs, which in turn boosts spending in the local and national economy," the report says.
The authors argue that a rapid boost in the supply of housing would also help to "dampen the housing bubble beginning to appear in response to government measures such as Help to Buy, which facilitates prospective homebuyers to find a deposit". The controversial Help to Buy scheme was the centrepiece of George Osborne's March budget, and has been questioned by a number of critics, from the former governor of the Bank of England, Lord King, to the International Monetary Fund, amid fears that it could create a new property boom.
Mark Carney, the Bank's new governor, has said he is "very alert personally" to the risk that a housing boom is emerging – and said he was ready to burst any bubble, by targeting mortgage lending.
Reforming the bailed-out banking system is another central proposal of the report, suggesting that Royal Bank of Scotland, which is majority-owned by the taxpayer, could be broken up into a series of regional lenders that would build relationships with local industries. "All the mechanisms which have been brought into play to encourage lending to the productive part of the economy don't seem to be working," says Simms.
Labour has promised to introduce a British Investment Bank, to boost lending to businesses; but it has eschewed much of the Green New Deal agenda over the past five years, focusing on an emergency VAT cut as the centrepiece of its policies to create a recovery.
Other members of Green New Deal include Charles Secrett, former director of Friends of the Earth; Jeremy Leggett, chairman of green energy firm Solarcentury; and Larry Elliott, economics editor of the Guardian.
Article Source: http://www.theguardian.com/environment/2013/sep/08/invest-greener-recovery
After two quarters of better-than-expected GDP growth and a batch of positive economic indicators – including rising house prices and upbeat business surveys – the coalition is hoping the summer economic bounce will turn into a longer-term recovery. But five years on from their first demands for a radical reworking of Britain's business model, the Green New Deal group, which includes Green party MP Caroline Lucas, economist Ann Pettifor and tax expert Richard Murphy, says the need for an alternative approach is greater than ever. In a report published on Monday, and seen by the Observer, it argues that recent growth has been based on unsustainable rises in consumer spending and house prices and could end in "the mother of all credit busts".
"Recovery is an interesting word to apply to an economy that is marked by rapidly rising personal debt, highly insecure and often low-paid work, and rising underlying carbon emissions. What we're calling a recovery is poor, divided, indebted and polluting," said Andrew Simms, chief analyst at thinktank Global Witness and an author of the report.
Central banks have poured cheap money into financial markets to drive down interest rates and prevent deflation and depression. But Green New Deal says this is a dangerous gamble: "Given the choice, they prefer to have the problem of asset prices going through the roof than the problem of deflation. If they are wrong and the bubble bursts before the recovery arrives, it will be the mother of all credit busts," it says.
Under an alternative plan in the Green New Deal report, the government would invest £50bn into expanding green technologies over five years, building low-cost housing, and employing a "carbon army" to insulate hundreds of thousands of homes and reduce energy use.
The authors say these measures would create more, and better-paid, jobs than the current debt-fuelled bounce, which Pettifor described as an "Alice in Wongaland" recovery. Lucas, who is the MP for Brighton Pavilion, said a grassroots workforce could be trained to lag Britain's chilly lofts "within weeks". "Ministers want to cut a nice big ribbon on a new nuclear power station – but this would be far more effective in getting our emissions down quickly," she said.
Real incomes have continued to fall over the past year, as above-target inflation has outpaced pay growth, in what the TUC has described as the greatest wage squeeze since the 1870s. Green New Deal argues that if more workers were paid a living wage it would help to create more sustainable consumer demand. Frances O'Grady, the general secretary of the TUC, which begins its annual congress in Bournemouth on Sunday, supported the Green New Deal initiative, saying: "The green economy already employs nearly a million people, in areas from electric-car manufacturing to wind-turbine installation. Implementing some of the ideas in this report could help these industries create more of the skilled and well-paid jobs we need if we are to build a sustainable recovery."
The authors suggest their pro-growth policies could be paid for by scrapping the controversial HS2 rail project; cracking down on tax evasion; and launching a fresh round of quantitative easing.
Instead of using electronically created money to buy government bonds from City investors, as the Bank of England has done with almost all of the £375bn-worth of QE it has undertaken since 2009, the proceeds this time would be used to invest in green projects, and pay off private finance initiative debts, freeing up public money to be spent elsewhere.
The report argues that investing in affordable housing, in particular, would benefit those on lower incomes more than the better off. "It can mean that people have more disposable income after housing costs, which in turn boosts spending in the local and national economy," the report says.
The authors argue that a rapid boost in the supply of housing would also help to "dampen the housing bubble beginning to appear in response to government measures such as Help to Buy, which facilitates prospective homebuyers to find a deposit". The controversial Help to Buy scheme was the centrepiece of George Osborne's March budget, and has been questioned by a number of critics, from the former governor of the Bank of England, Lord King, to the International Monetary Fund, amid fears that it could create a new property boom.
Mark Carney, the Bank's new governor, has said he is "very alert personally" to the risk that a housing boom is emerging – and said he was ready to burst any bubble, by targeting mortgage lending.
Reforming the bailed-out banking system is another central proposal of the report, suggesting that Royal Bank of Scotland, which is majority-owned by the taxpayer, could be broken up into a series of regional lenders that would build relationships with local industries. "All the mechanisms which have been brought into play to encourage lending to the productive part of the economy don't seem to be working," says Simms.
Labour has promised to introduce a British Investment Bank, to boost lending to businesses; but it has eschewed much of the Green New Deal agenda over the past five years, focusing on an emergency VAT cut as the centrepiece of its policies to create a recovery.
Other members of Green New Deal include Charles Secrett, former director of Friends of the Earth; Jeremy Leggett, chairman of green energy firm Solarcentury; and Larry Elliott, economics editor of the Guardian.
Article Source: http://www.theguardian.com/environment/2013/sep/08/invest-greener-recovery
Tuesday, 3 September 2013
New Loan Scheme Aims to Bring Empty Homes Back Into Use
This engaging article by The Independent on September 2nd, 2013 reveals a new loan scheme that intends to assist the country's housing shortage by giving affordable loans to owners of empty properties.
A new scheme hopes to help solve the country’s housing shortage by handing cheap loans to owners of Britain’s 710,000 empty properties.
A new scheme hopes to help solve the country’s housing shortage by handing cheap loans to owners of Britain’s 710,000 empty properties.
The cash – up to £15,000 per property – will be offered to help with
renovations through a new Government-backed £3m National Homes Empty
Loan Fund, which has
been set up following last year’s Great British Property Scandal
campaign by
architect George Clarke.
It will be administered by green lender the Ecology building society in conjunction with the Empty Homes charity and 39 local authorities.
David Ireland, chief executive of Empty Homes, said: “Many homes are empty because it is difficult for owners to raise the money needed to bring them back up to a habitable standard. The scheme will kick-start efforts to tackle this.”
The loans will be charged at a fixed 5 per cent and are available to those who own a property that has been empty for six months or more.
Ecology chief Paul Ellis said: “At a time when there is increasing demand for homes but an acute lack of supply, it makes sense to bring new life to existing but neglected properties.”
Article Source: http://www.independent.co.uk/property/house-and-home/property/new-loan-scheme-aims-to-bring-empty-homes-back-into-use-8794322.html
It will be administered by green lender the Ecology building society in conjunction with the Empty Homes charity and 39 local authorities.
David Ireland, chief executive of Empty Homes, said: “Many homes are empty because it is difficult for owners to raise the money needed to bring them back up to a habitable standard. The scheme will kick-start efforts to tackle this.”
The loans will be charged at a fixed 5 per cent and are available to those who own a property that has been empty for six months or more.
Ecology chief Paul Ellis said: “At a time when there is increasing demand for homes but an acute lack of supply, it makes sense to bring new life to existing but neglected properties.”
Article Source: http://www.independent.co.uk/property/house-and-home/property/new-loan-scheme-aims-to-bring-empty-homes-back-into-use-8794322.html
Wednesday, 28 August 2013
Prime Property Discounts Fall Sharply
Ryan Fowler of Mortgage Introducer on 28th of August, 2013 reveals new research from PrimeLocation.com stating UK's prime property sale has dropped sharply in the last 12 months.
The chances of finding a bargain on a prime property for sale in the UK has fallen sharply in the last 12 months, new research from PrimeLocation.com has revealed.
The proportion of prime properties (those worth over £1m) currently for sale that have been reduced in price since originally coming onto the market now stands at only one in five (21%), down sharply from 28% one year ago. The average discount on those properties that have seen a price reduction is currently 8.9%.
Lawrence Hall of PrimeLocation.com, said: “Anyone who thinks that property buyers at the top end of the market are less price sensitive is mistaken.
“Even more so, because the numbers are so much bigger, prime buyers are always looking for the best possible deal.
“Whilst there are less discounted properties on the market than in recent years, there are still some areas where prices have been reduced significantly and bargains are to be had.”
One such area is Bromley in South East London which has the highest proportion of discounted million pound homes for sale with almost half (49.3%) of those on the market currently having been reduced to tempt buyers.
Barnet and Rickmansworth, both in North London, round out the top three locations with the highest levels of reduced-price prime properties at 33.9% and 31.2% respectively.
At the other end of the scale, only 10% of Edinburgh’s prime properties currently on the market have been reduced in price to attract buyers.
The market for million pound homes in Guernsey and the Isle of Man appears strong with each having amongst the lowest proportions of discounted prime properties in the UK, at 12% and 13.6% respectively.
Unsurprisingly, some of the lowest levels of discounts on offer on prime properties are in London suburbs including Kingston upon Thames (4.2%), Northwood (4.6%) and Richmond (5.3%). However, prime property owners in Newcastle and Oxford appear less confident about their original asking prices with the average discount on million pound Tyneside homes at 20.6% and in Oxford currently at 14.1%.
Article Source: http://www.mortgageintroducer.com/mortgages/247382/5/Industry_in_depth/Prime_property_discounts_fall_sharply.htm
The chances of finding a bargain on a prime property for sale in the UK has fallen sharply in the last 12 months, new research from PrimeLocation.com has revealed.
The proportion of prime properties (those worth over £1m) currently for sale that have been reduced in price since originally coming onto the market now stands at only one in five (21%), down sharply from 28% one year ago. The average discount on those properties that have seen a price reduction is currently 8.9%.
Lawrence Hall of PrimeLocation.com, said: “Anyone who thinks that property buyers at the top end of the market are less price sensitive is mistaken.
“Even more so, because the numbers are so much bigger, prime buyers are always looking for the best possible deal.
“Whilst there are less discounted properties on the market than in recent years, there are still some areas where prices have been reduced significantly and bargains are to be had.”
One such area is Bromley in South East London which has the highest proportion of discounted million pound homes for sale with almost half (49.3%) of those on the market currently having been reduced to tempt buyers.
Barnet and Rickmansworth, both in North London, round out the top three locations with the highest levels of reduced-price prime properties at 33.9% and 31.2% respectively.
At the other end of the scale, only 10% of Edinburgh’s prime properties currently on the market have been reduced in price to attract buyers.
The market for million pound homes in Guernsey and the Isle of Man appears strong with each having amongst the lowest proportions of discounted prime properties in the UK, at 12% and 13.6% respectively.
Unsurprisingly, some of the lowest levels of discounts on offer on prime properties are in London suburbs including Kingston upon Thames (4.2%), Northwood (4.6%) and Richmond (5.3%). However, prime property owners in Newcastle and Oxford appear less confident about their original asking prices with the average discount on million pound Tyneside homes at 20.6% and in Oxford currently at 14.1%.
Article Source: http://www.mortgageintroducer.com/mortgages/247382/5/Industry_in_depth/Prime_property_discounts_fall_sharply.htm
Tuesday, 27 August 2013
Opinion Stands Divided Over UK Housing Programme
This August 26, 2013 article by Julia Werdigier of gulfnews.com reveals the ongoing debate about the help to buy scheme housing programme by the government.
London: Depending on where one stands in the debate on the rising cost of housing in Britain, Paul Thomas and Abigail Walker, first-time home buyers, are either part of the solution or part of the problem.
To buy a £248,000 (Dh1.4 million) two-bedroom house in Oxfordshire, west of London, Thomas, a 38-year-old electrician, and his 25-year-old partner, Walker, who works in an accounting office, are making use of a government programme called Help to Buy. They are making a down payment of only 5 per cent from their own funds, and the government is giving them an interest-free loan to cover the other 20 per cent of the down payment.
The government of Prime Minister David Cameron has cast the programme as a way to stimulate the country’s sluggish economy by helping consumers buy homes they could not otherwise afford. But critics say it could lead to a housing bubble and a spate of problem loans on which the government could be left to make good.
Under Help to Buy, introduced in March, the government either offers interest-free credit or guarantees part of the property loan. The resulting higher demand for homes is supposed to fuel construction and aid the economic recovery.
“Help to Buy is a dramatic intervention to get our housing market moving,” George Osborne, the chancellor of the Exchequer, told Parliament in presenting the plan. “That is a good use of this government’s fiscal credibility.”
Market pick-up
But during the last month, the outcry has grown from some lawmakers and economists, who are demanding an early end for Help to Buy. They note that the housing market was already picking up and warn that the plan could create a housing bubble that would likely burst when the programme expires in 2016, while driving price increases that will make homes even less affordable for many in the meantime
Critics also question the wisdom of giving people a mortgage with a down payment of as little as 5 per cent when lenders are under pressure from regulators to reduce the riskiness of loans.
The plan as announced in March by Osborne came in two parts. The first piece, in place since April, is limited to the purchase of newly built homes. The government offers a five-year, interest-free loan for 20 per cent of the home value to put toward the down payment. Thomas and Walker are getting help through that portion of the programme.
The second and more contentious part of the plan, which is to start in January, allows anyone to buy a house with only a 5 per cent down payment. The government would then guarantee an additional 20 per cent of the bank loan for any property worth as much as £600,000, effectively passing the risk to the government from the lender.
“Using the government’s balance sheet to back these higher loan-to-value mortgages will dramatically increase their availability,” Osborne said when he presented the plan to Parliament in March.
Thomas and Walker had recently moved in with Walker’s mother in Oxfordshire to save money for a deposit, which they said would have taken them 10 years to come up with on their own.
But now they plan to move into their newly built home in the autumn. Instead of a £62,000 down payment on the purchase price of £248,000, they had to put down only £12,400. Help to Buy is coming up with the rest.
“It really put a smile on my face,” Thomas said.
Motive behind scheme
Some economists said making voters like Thomas happy was the main motive for Osborne’s plan. About two years before the next general election, and with recent opinion polls showing the opposition Labour Party neck and neck with Osborne’s Conservative Party, Osborne is betting on the housing market. Not being able to afford a home is “a blow to the most human of aspirations,” he told Parliament.
The government says the programme has been a success so far. More than 10,000 people have reserved newly built homes since April, and the number of first-time buyers was at the highest level since 2007, the government said this month.
Barratt Developments, one of Britain’s largest house builders, said sales had risen 35 per cent in the three months through the end of June, from the comparable period last year, with “a significant amount” of the upturn a result of Help to Buy.
But Britain’s housing market had already been improving. Helped by record low interest rates and demand from foreign buyers, especially in London, prices of homes nationwide rose 4.6 per cent in the three months to July, the highest annual increase since August 2010, according to the mortgage provider Halifax. In London, the increase was 8.1 per cent.
Compared with the United States or some countries in Southern Europe, Britain’s housing market downturn after the financial crisis was relatively mild. Home prices in Britain fell less steeply from their 2007 peak than those in the US because of a combination of mortgage laws and a shortage of new homes.
London home prices
Home prices have increased so much in London that the average first-time buyer now has to spend half of his net salary on mortgage payments, according to the Nationwide Building Society.
Osborne and the Bank of England’s new governor, Mark J. Carney, have rebutted criticism of the housing programme, saying Britain was still far from a housing bubble.
But behind the scenes at the Bank of England’s Prudential Regulation Authority, which is in charge of ensuring the safety of banks, there are concerns that Help to Buy conflicts with the regulator’s aim of reducing risk in the banking sector and applying stricter lending rules, according to a senior bank official, who spoke on the condition of anonymity.
Banks that have signed up for the programme include the Lloyds Banking Group, in which the government continues to hold a stake after a bailout, along with Nationwide and Santander.
Those banks and others are in talks with the government about how much lenders will have to pay to participate in Help to Buy and how much capital the banks will have to hold for those loans.
Many economists are asking why, if banks are unwilling to take the extra risk of making such loans without government inducements, the government should be expected to backstop the programme.
Andrew Brigden, an economist at Fathom Consulting, said the programme would make it easier for banks to make riskier loans. Help to Buy is a “reckless scheme” because it “uses public money to incentivise the banks to lend precisely to those individuals who should not be offered credit,” Brigden said.
But Osborne has argued that the programme is fixing a mortgage market that has been discriminating against people who can afford the monthly mortgage payments but do not have enough savings for a down payment. Passing part of the lending risk from the banks to the government does not worry him, he said.
“Because it’s a financial transaction, with the taxpayer making an investment and getting a return,” Osborne said, “it won’t hit our deficit.”
Article Source: http://gulfnews.com/business/property/international/opinion-stands-divided-over-uk-housing-programme-1.1224135
Under the plan, the government either offers interest-free credit or guarantees part of the property loan.
London: Depending on where one stands in the debate on the rising cost of housing in Britain, Paul Thomas and Abigail Walker, first-time home buyers, are either part of the solution or part of the problem.
To buy a £248,000 (Dh1.4 million) two-bedroom house in Oxfordshire, west of London, Thomas, a 38-year-old electrician, and his 25-year-old partner, Walker, who works in an accounting office, are making use of a government programme called Help to Buy. They are making a down payment of only 5 per cent from their own funds, and the government is giving them an interest-free loan to cover the other 20 per cent of the down payment.
The government of Prime Minister David Cameron has cast the programme as a way to stimulate the country’s sluggish economy by helping consumers buy homes they could not otherwise afford. But critics say it could lead to a housing bubble and a spate of problem loans on which the government could be left to make good.
Under Help to Buy, introduced in March, the government either offers interest-free credit or guarantees part of the property loan. The resulting higher demand for homes is supposed to fuel construction and aid the economic recovery.
“Help to Buy is a dramatic intervention to get our housing market moving,” George Osborne, the chancellor of the Exchequer, told Parliament in presenting the plan. “That is a good use of this government’s fiscal credibility.”
Market pick-up
But during the last month, the outcry has grown from some lawmakers and economists, who are demanding an early end for Help to Buy. They note that the housing market was already picking up and warn that the plan could create a housing bubble that would likely burst when the programme expires in 2016, while driving price increases that will make homes even less affordable for many in the meantime
Critics also question the wisdom of giving people a mortgage with a down payment of as little as 5 per cent when lenders are under pressure from regulators to reduce the riskiness of loans.
The plan as announced in March by Osborne came in two parts. The first piece, in place since April, is limited to the purchase of newly built homes. The government offers a five-year, interest-free loan for 20 per cent of the home value to put toward the down payment. Thomas and Walker are getting help through that portion of the programme.
The second and more contentious part of the plan, which is to start in January, allows anyone to buy a house with only a 5 per cent down payment. The government would then guarantee an additional 20 per cent of the bank loan for any property worth as much as £600,000, effectively passing the risk to the government from the lender.
“Using the government’s balance sheet to back these higher loan-to-value mortgages will dramatically increase their availability,” Osborne said when he presented the plan to Parliament in March.
Thomas and Walker had recently moved in with Walker’s mother in Oxfordshire to save money for a deposit, which they said would have taken them 10 years to come up with on their own.
But now they plan to move into their newly built home in the autumn. Instead of a £62,000 down payment on the purchase price of £248,000, they had to put down only £12,400. Help to Buy is coming up with the rest.
“It really put a smile on my face,” Thomas said.
Motive behind scheme
Some economists said making voters like Thomas happy was the main motive for Osborne’s plan. About two years before the next general election, and with recent opinion polls showing the opposition Labour Party neck and neck with Osborne’s Conservative Party, Osborne is betting on the housing market. Not being able to afford a home is “a blow to the most human of aspirations,” he told Parliament.
The government says the programme has been a success so far. More than 10,000 people have reserved newly built homes since April, and the number of first-time buyers was at the highest level since 2007, the government said this month.
Barratt Developments, one of Britain’s largest house builders, said sales had risen 35 per cent in the three months through the end of June, from the comparable period last year, with “a significant amount” of the upturn a result of Help to Buy.
But Britain’s housing market had already been improving. Helped by record low interest rates and demand from foreign buyers, especially in London, prices of homes nationwide rose 4.6 per cent in the three months to July, the highest annual increase since August 2010, according to the mortgage provider Halifax. In London, the increase was 8.1 per cent.
Compared with the United States or some countries in Southern Europe, Britain’s housing market downturn after the financial crisis was relatively mild. Home prices in Britain fell less steeply from their 2007 peak than those in the US because of a combination of mortgage laws and a shortage of new homes.
London home prices
Home prices have increased so much in London that the average first-time buyer now has to spend half of his net salary on mortgage payments, according to the Nationwide Building Society.
Osborne and the Bank of England’s new governor, Mark J. Carney, have rebutted criticism of the housing programme, saying Britain was still far from a housing bubble.
But behind the scenes at the Bank of England’s Prudential Regulation Authority, which is in charge of ensuring the safety of banks, there are concerns that Help to Buy conflicts with the regulator’s aim of reducing risk in the banking sector and applying stricter lending rules, according to a senior bank official, who spoke on the condition of anonymity.
Banks that have signed up for the programme include the Lloyds Banking Group, in which the government continues to hold a stake after a bailout, along with Nationwide and Santander.
Those banks and others are in talks with the government about how much lenders will have to pay to participate in Help to Buy and how much capital the banks will have to hold for those loans.
Many economists are asking why, if banks are unwilling to take the extra risk of making such loans without government inducements, the government should be expected to backstop the programme.
Andrew Brigden, an economist at Fathom Consulting, said the programme would make it easier for banks to make riskier loans. Help to Buy is a “reckless scheme” because it “uses public money to incentivise the banks to lend precisely to those individuals who should not be offered credit,” Brigden said.
But Osborne has argued that the programme is fixing a mortgage market that has been discriminating against people who can afford the monthly mortgage payments but do not have enough savings for a down payment. Passing part of the lending risk from the banks to the government does not worry him, he said.
“Because it’s a financial transaction, with the taxpayer making an investment and getting a return,” Osborne said, “it won’t hit our deficit.”
Article Source: http://gulfnews.com/business/property/international/opinion-stands-divided-over-uk-housing-programme-1.1224135
Monday, 19 August 2013
UK Property Asking Prices Up 5.5% Year/Year in Aug
According to Rightmove on Monday Britain's asking home prices are 5.5% up compared to last year as revealed on this article by Reuters on August 18, 2013.
Aug 19 (Reuters) - Asking prices for homes in Britain are 5.5 percent higher than a year ago, property website Rightmove said on Monday as it urged the government to boost the supply of new homes to avoid a house price bubble.
Rightmove figures, which are not seasonally adjusted, show the price of property coming on to the market has risen 8.8 percent in the first eight months of the year.
Record low mortgage rates, government lending incentives and rising optimism in Britain's economic recovery have fuelled a marked pick up in house price inflation in recent months.
Mortgage lender Halifax reported prices rose an annual 4.6 percent in July and a survey last week from the Royal Institution of Chartered Surveyors suggested house prices were rising at their fastest pace since 2006.
The rally has been most marked in London where prices are up 10.2 percent on the year, according to Rightmove.
With house prices already rising faster than inflation, the government is under pressure from some quarters to abandon plans to offer state-backed guarantees to riskier homebuyers.
The scheme, part of the "Help to Buy" initiative announced by the government in their March Budget, is due to take effect in January.
"Demand is already on the up, and that's before the roll-out of phase two of the Help to Buy stimulus," said Rightmove director Miles Shipside. "It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices."
The first phase of the government's "Help to Buy" scheme took effect in April and offers subsidies to buyers of new-build properties.
Article Source: http://www.reuters.com/article/2013/08/18/britain-property-rightmove-idUSL6N0GH1KA20130818
Aug 19 (Reuters) - Asking prices for homes in Britain are 5.5 percent higher than a year ago, property website Rightmove said on Monday as it urged the government to boost the supply of new homes to avoid a house price bubble.
Rightmove figures, which are not seasonally adjusted, show the price of property coming on to the market has risen 8.8 percent in the first eight months of the year.
Record low mortgage rates, government lending incentives and rising optimism in Britain's economic recovery have fuelled a marked pick up in house price inflation in recent months.
Mortgage lender Halifax reported prices rose an annual 4.6 percent in July and a survey last week from the Royal Institution of Chartered Surveyors suggested house prices were rising at their fastest pace since 2006.
The rally has been most marked in London where prices are up 10.2 percent on the year, according to Rightmove.
With house prices already rising faster than inflation, the government is under pressure from some quarters to abandon plans to offer state-backed guarantees to riskier homebuyers.
The scheme, part of the "Help to Buy" initiative announced by the government in their March Budget, is due to take effect in January.
"Demand is already on the up, and that's before the roll-out of phase two of the Help to Buy stimulus," said Rightmove director Miles Shipside. "It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not over-shadowed by an unsustainable boom in property prices."
The first phase of the government's "Help to Buy" scheme took effect in April and offers subsidies to buyers of new-build properties.
Article Source: http://www.reuters.com/article/2013/08/18/britain-property-rightmove-idUSL6N0GH1KA20130818
Thursday, 15 August 2013
Property Sales on the Rise in Cheltenham say Estate Agents
Good news for property buyers because property sales are prospering in Cheltenham according to this article by Gloucestershire Echo on August 14th, 2013.
PROPERTY sales are booming in Cheltenham, according to local estate agents.
There are less houses on the market than there are willing buyers, making demand for homes the highest it has been in four years.
During July, the number of potential buyers looking to enter the market nationally grew at the fastest rate in the UK since July 2009.
Since the start of the year, buyers have gradually been returning to test the market and the number of would-be buyers seen have grown.
Erling Lindoe, branch partner for RA Bennett & Partners based in Bath Road, Cheltenham, said: "Everything is wonderful.
"The housing market is booming and there are not enough properties to go around.
"If you have got a property that is priced well, it will sell, which is probably due to demand.
"Over the past four years, rents have been increasing and have caused borrowing to stay very low." With rising buyer confidence, more potential sellers looked to test the market and place their homes up for sale.
Last month, 15 per cent more respondents reported rises rather than falls in new instructions.
Mr Lindoe said: "I wasn't necessarily aware that there is a major issue in the market.
"The market in Cheltenham is a very simple case of demand and supply. Demand is currently exceeding supply which helps. But I don't see that house prices are rising at the moment."
As part of continued growth, a Royal Institute of Chartered Surveyors (RICS) residential market survey expects sales to rise rather than fall over the next three months.
RICS global residential director Peter Bolton King said: "These results are great news for the property market as it looks like at long last a recovery could be around the corner.
"Growth in buyer numbers and prices have been happening in some parts of the country since the beginning of the year but this is the first time that everywhere has experienced some improvement.
"It is clearly good news those parts of the property market that were struggling are at last showing some signs of life."
Article Source: http://www.thisisgloucestershire.co.uk/Property-sales-rise-Cheltenham-say-estate-agents/story-19655110-detail/story.html#axzz2c02FvAzB
Friday, 9 August 2013
How Slashing Stamp Duty will Help Young Homebuyers
This article was published on August 8, 2013 on Home & Property. According to Naomi Heaton slashing stamp duty is the best way to get young Londoners into their first home.
As Scottish ministers finally do away with stamp duty and a consultation begins in Wales to do the same thing, it is high time the Tories also kept to their election promise and made changes to Britain's most-hated tax.
A crisis looms as the average price of property in England and Wales rapidly approaches the £250,000 mark — the point when stamp duty triples from one per cent to three per cent of the purchase price. This increase could see 80,000 people a year falling into this higher tax bracket, facing a huge £7,500 tax bill, rather than a somewhat more affordable £2,500.
It is ironic that it was a Scotsman who first introduced the crippling £250,000 stamp duty tax threshold. Before Gordon Brown took the job as chancellor, stamp duty was set at a flat rate of one per cent for all properties sold over £60,000. In 1997, however, Brown introduced the notion of stepped stamp duty tax bands, bringing in a new threshold of 1.5 per cent at £250,001. He then raised the charge by half of one per cent every year until 2000, when it reached three per cent. It has stuck at that level ever since.
In the apparent interest of "fair taxation" — but more as a desperate attempt to plug the public finance deficit — recent years have brought additional thresholds at £500,000, £1 million and £2 million. No move, though, has been made to raise the level at which the three per cent tax hit kicks in, despite average house prices rising over threefold from £72,900 to £239,296 since 1997.
Stamp duty was a tax introduced to generate revenue from the wealthiest of buyers. According to Nationwide, a house worth £250,000 in 1997 would be equivalent to £716,000 today. One could say it was the "mansion tax" of the Nineties but what equated to riches then is no longer the case in 2013.
Having dragged more and more ordinary buyers into its grips, stamp duty will soon be an "everyman" tax: just another way for the Treasury to dip into our pockets.
Now first-time buyers are being frozen out
Across the country, 26 per cent of buyers now pay more than £250,000 for their property and in London it is 62 per cent. For people who have already paid income tax, stumping up another £5,000 of stamp duty for their family home is not only a double whammy but equivalent to another 10 per cent on top of their deposit.
Transactions have dropped 32 per cent since 1997 and the fall-out, should the band not be reassessed, could be even more devastating. Not surprisingly, potential buyers are reluctant to pay three per cent stamp duty on properties above £250,000. Not only is this a barrier to trading up but owners of properties above £250,000 are then unable to sell, or only at a reduced price, which means they cannot trade up either. This freezes the market and prevents first-time buyers from getting a look-in.
As "stamp duty Doomsday" beckons, and with average prices within a hair's breadth of £250,000, the present Chancellor must move quickly to reassess the tax banding. While the Government's much-trumpeted Help to Buy stimulus package has begun to unlock the market, this can only be good news if the one per cent stamp duty trigger is also raised.
Re-evaluating the threshold will give buyers a much-needed boost, allowing home owners to trade up and first-time buyers to begin climbing the ladder. Even the Treasury can make some money. For every purchase that does not happen because of the £250,000 barrier, the Government earns three per cent of nothing. For every property sale that would go through, due to a kinder stamp duty regime, the Government would earn one per cent of something: a win-win situation which would make a real difference.
A government keen to trumpet "fair taxation" should question how this tax can possibly bring fairness to a nation of aspiring homeowners, and take heed of the TaxPayers' Alliance Stamp Out Stamp Duty campaign.
Naomi Heaton is chief executive of London Central Portfolio, residential experts and fund managers (londoncentralportfolio.com).
Article Source: http://www.homesandproperty.co.uk/property_news/news/stampdutycrisishigherrates.html
As Scottish ministers finally do away with stamp duty and a consultation begins in Wales to do the same thing, it is high time the Tories also kept to their election promise and made changes to Britain's most-hated tax.
A crisis looms as the average price of property in England and Wales rapidly approaches the £250,000 mark — the point when stamp duty triples from one per cent to three per cent of the purchase price. This increase could see 80,000 people a year falling into this higher tax bracket, facing a huge £7,500 tax bill, rather than a somewhat more affordable £2,500.
It is ironic that it was a Scotsman who first introduced the crippling £250,000 stamp duty tax threshold. Before Gordon Brown took the job as chancellor, stamp duty was set at a flat rate of one per cent for all properties sold over £60,000. In 1997, however, Brown introduced the notion of stepped stamp duty tax bands, bringing in a new threshold of 1.5 per cent at £250,001. He then raised the charge by half of one per cent every year until 2000, when it reached three per cent. It has stuck at that level ever since.
In the apparent interest of "fair taxation" — but more as a desperate attempt to plug the public finance deficit — recent years have brought additional thresholds at £500,000, £1 million and £2 million. No move, though, has been made to raise the level at which the three per cent tax hit kicks in, despite average house prices rising over threefold from £72,900 to £239,296 since 1997.
Stamp duty was a tax introduced to generate revenue from the wealthiest of buyers. According to Nationwide, a house worth £250,000 in 1997 would be equivalent to £716,000 today. One could say it was the "mansion tax" of the Nineties but what equated to riches then is no longer the case in 2013.
Having dragged more and more ordinary buyers into its grips, stamp duty will soon be an "everyman" tax: just another way for the Treasury to dip into our pockets.
Now first-time buyers are being frozen out
Across the country, 26 per cent of buyers now pay more than £250,000 for their property and in London it is 62 per cent. For people who have already paid income tax, stumping up another £5,000 of stamp duty for their family home is not only a double whammy but equivalent to another 10 per cent on top of their deposit.
Transactions have dropped 32 per cent since 1997 and the fall-out, should the band not be reassessed, could be even more devastating. Not surprisingly, potential buyers are reluctant to pay three per cent stamp duty on properties above £250,000. Not only is this a barrier to trading up but owners of properties above £250,000 are then unable to sell, or only at a reduced price, which means they cannot trade up either. This freezes the market and prevents first-time buyers from getting a look-in.
As "stamp duty Doomsday" beckons, and with average prices within a hair's breadth of £250,000, the present Chancellor must move quickly to reassess the tax banding. While the Government's much-trumpeted Help to Buy stimulus package has begun to unlock the market, this can only be good news if the one per cent stamp duty trigger is also raised.
Re-evaluating the threshold will give buyers a much-needed boost, allowing home owners to trade up and first-time buyers to begin climbing the ladder. Even the Treasury can make some money. For every purchase that does not happen because of the £250,000 barrier, the Government earns three per cent of nothing. For every property sale that would go through, due to a kinder stamp duty regime, the Government would earn one per cent of something: a win-win situation which would make a real difference.
A government keen to trumpet "fair taxation" should question how this tax can possibly bring fairness to a nation of aspiring homeowners, and take heed of the TaxPayers' Alliance Stamp Out Stamp Duty campaign.
Naomi Heaton is chief executive of London Central Portfolio, residential experts and fund managers (londoncentralportfolio.com).
Article Source: http://www.homesandproperty.co.uk/property_news/news/stampdutycrisishigherrates.html
Thursday, 8 August 2013
Henderson: UK Property at ‘Very Fair’ Levels
This August 6, 2013 article by Eleanor Lawrie of the FT Adviser reveals how Henderson fund is seeing healthy inflows as outlook improves.
UK property valuations are at “very fair” levels even though they are significantly lower than prior to the 2008 crash, according to Henderson’s Ainslie McLennan.
The co-manager of the £989m Henderson UK Property fund said positive incremental changes in valuations were more reassuring than dramatic spikes up and down.
“We have come through such a difficult time in 2007-09 and we haven’t got close to getting back to those valuations,” the manager said.
Ms McLennan, who runs the fund alongside Marcus Langlands-Pearse, said the product was seeing “healthy inflows” as investors seek alternatives from volatile assets.
She said: “The fund has seen very healthy inflows over the year. There is money coming out of cash, some from bonds, some from commodities. I think it’s healthy that it’s coming from different places - a spread of asset classes.”
The manager described property as “the opposite to equities and bonds”, offering a gilt-style steady return but with roughly one-third the risk of equities.
Ms McLennan estimated that half of the recent interest in the fund had been from discretionary wealth managers, and half from the adviser community.
Ms McLennan said other property funds might struggle from tenants not being able to keep up with payments, but said the longer leases held by the Henderson fund would eliminate this problem.
The main tactical play in the fund is an underweight in high street retail properties, which make up just 5 per cent of its holdings. Ms McLennan said the changing habits of consumers in the UK had weakened high street shops, as people increasingly shop online or in retail parks.
“We are trying to find businesses that are relevant going forward and have longevity, and that aren’t at risk of massive change,” she said.
Instead, the fund owns retail stores in “robust locations” with little competition, such as a branch of Marks & Spencer in Nottingham and House of Fraser in Chichester.
Roughly 70 per cent of the fund is in the southeast of England due to the managers’ cautious outlook and the region’s strength relative to other areas of the UK.
The Henderson UK Property fund has underperformed the IMA Property sector in one, three and five years to July 31, according to FE Analytics. In three years, the fund returned 10.9 per cent compared with a 22.8 per cent average return from the peer group, while in five years, the fund has risen 2.3 per cent, compared with a 13.6 per cent average rise for the sector.
In June, Henderson announced it was combining its real estate business with that of US-based TIAA-CREF to create a European and Asian real estate company called TIAA Henderson Global Real Estate. Henderson has moved to reassure investors that there will be no changes to the management or process on the UK Property fund.
Article Source: http://www.ftadviser.com/2013/08/06/investments/property/henderson-uk-property-at-very-fair-levels-Q2h5oTJta3VmejjXFqxWZL/article.html
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