Strong government support for foreign property investors

House moneyHousing minister has Brandon Lewis has thrown his weight behind the right of foreign investors to purchase buy to let properties, saying they play “an important part” in the British housing market.

In an interview in the Sunday Times, Lewis says he will do nothing to deter or stop overseas buy to let investors who – according to some critics – have contributed to high house prices in many locations, notably London, and sometimes leave their properties empty despite the apparent housing shortages in many areas.

“It’s easy to smash foreign investment but it plays quite an important part in delivering affordable housing for people” he claims, referring to developers’ obligations to fund some affordable housing in return for winning planning consent for high-end apartments.

Lewis also says that without international investment, most London residential development during the economic slowdown “would have just stopped.”

This appears to put him on a different course to London mayor and newly-elected MP Boris Johnson, who in the past has called for foreign investment buyers to pay 10 times the current rate of council tax if they leave their properties empty, and has also called on developers to “put Londoners first” when it comes to marketing new homes.

Source: Estate Agent Today

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UK house prices to grow 24% by 2016 – BNP Paribas

BNP ParibasHouse prices in London will have shot up by 73% between 2010 and 2020.

The prediction comes from a property firm, BNP Paribas Real Estate, mainly known for its commercial activities.

The firm is also forecasting that UK house prices will have grown 24% in the next four years – between now and the end of 2016.

The forecast says that there will be a fall this year in UK house prices of 1.1% but a growth next year of 0.9%. In other words, house prices will have to get motoring from 2014 onwards, if the prediction is correct.

The firm says that last year, house prices in London grew 2.7%. This year, growth will be much the same at 2.65%, but next year, it is forecasting London house price growth of 6.6%, and 7.1% in 2014.

Tim Cann, head of residential at BNP Paribas Real Estate, said: “With some very early tentative signs of some improvements in the housing market, our forecast for 2013 is more upbeat than 2012, with UK house prices forecast to grow 0.9%.

“Whilst this increase won’t offset the falling values experienced in 2011 and 2012, positive growth will certainly be a move in the right direction.

“Beyond 2014 we are expecting the UK growth rate to accelerate, with UK house prices forecast to rise 8.8% in 2015.”

BNP Paribas Real Estate put its house price forecast together with the help of Professor Patrick Minford, former economics adviser to Margaret Thatcher and currently professor of economics at Cardiff Business School.

Source: Estate Agent Today
 

Landlords show appetite to grow portfolios

Research by specialist buy-to-let mortgage lender Paragon Mortgages reveals an increase in landlords’ property portfolios in the second quarter of 2012.

During the past three months landlords’ property portfolios increased from an average of 12.9 in Q1, to 14.1 properties in Q2. This is also an increase on Q2 2011 when the average portfolio size was 12.5 properties.

A fifth (21%) of landlords who took part in the quarterly Private Rented Sector Trends Survey, said that they were planning to add to their portfolios in the third quarter of this year, which is up from 18% during the same time period last year.

Of those landlords who are planning to purchase buy-to-let property in Q3, 49% will be investing in terraced houses – which remain the most popular property type for landlords to invest in.

More than a quarter of landlords (26%) expect to buy flats or maisonettes, and 23% plan to purchase semi-detached houses.

John Heron, Managing Director said: “The fact that landlords are planning to make further investments in their property portfolios is positive news. It shows their appetite to grow their business to meet the on-going demands from tenants and demonstrates the viability of the UK’s PRS.

“The issues around housing supply in the UK are well documented and have been hotly debated over the past few months in particular. However, what our research shows is that landlords are investing further in PRS property and they look set to continue to buy over the coming quarters. Whilst this will not solve the problems around supply it will make a valuable contribution.”

Source: PropertytalkLive
 

Budget 2012 – Chancellor cuts 50p top tax rate

British Chancellor George Osborne has announced that the Government is to reduce the controversial 50p top rate of income tax to 45p from April 2013.

But his Budget has taken a swipe at the wealthy in a series of other tax and anti-avoidance measures.

Justifying the end of the 50p top rate of income tax paid on earnings over £150,000, Osborne said it damaged competitiveness and had only raised a third of the £3billion expected.

Instead, five times as much would be raised from the very rich by other policies in the Budget.

New “anti avoidance” tax rules would tackle the “morally repugnant” practice of people not paying the tax that they should.

Most notable of these is the plan for a staggering 15% stamp duty charge levied on people who buy expensive homes using offshore companies.

Individuals buying property costing more than £2million will also pay a new rate of 7%, up from the current 5%.

At the other end of the scale, the threshold at which income tax is paid – £8105 from next month – will rise to £9205 in 2013.

Osborne’s outlook for the economy in general saw the growth forecast for 2012 rise marginally from 0.7% to 0.8%.

He also said the Government was “on course” to eliminate the structural deficit by 2016-7.

And, while the UK was expected to avoid a “technical recession” the euro zone and oil prices remained a threat.

Unemployment is expected to peak this year at 8.7% before falling.

Osborne said it was a “Budget that rewards work”.

“Britain is going to earn its way in the world,” he said. “There is no other road to recovery.”

Source: Investor Today
 

Biggest monthly asking price jump for a decade

The onset of the spring moving season generally leads to more ambitious pricing of properties coming to market, partly due to estate agents vying for new seller instructions.

However, this February’s 4.1% (£9,192) increase is the highest monthly rise Rightmove has recorded since April 2002, a surprisingly strong uplift given the challenging economic environment.

In part this is fuelled by the cash-rich sectors of the market where buyer demand is exceeding suitable property supply, though there is also evidence of increasing housing market confidence. After four years of constant economic uncertainty, it seems some property consumers have accepted current market conditions as the new norm.

Miles Shipside, director at Rightmove comments: “We’re seeing a strong ‘spring bounce’ in asking prices this year, but the ball is still a lot smaller than it was before the credit crunch as market volumes are constrained. The biggest jump in new sellers’ asking prices for nearly ten years indicates there is pricing power if you are selling the right type of property in the right place where enough potential buyers have access to funding. If your local market does not have those characteristics and your price-pump is based on little more than seasonal optimism and an estate agent’s hot air, then be prepared for buyer response to be a let-down.

“However, there are also indications that those who are able to buy but had previously lacked the confidence to take the plunge are of a more positive mindset this year. Perhaps some people are adjusting to the realities, opportunities and strange normality of a low volume but apparently stable property market”.

Record January search activity on Rightmove indicates a pent-up desire to move that out-weighs the uncertain economic outlook. With sales transaction numbers having been depressed for the last four years, many households will have a pressing need to move, and some of those that are able to do so seem to be springing back to life.

Shipside comments: “Search activity on Rightmove is up by 19% on January 2011, and it could be a sign that some of those who can afford to move have decided to get on with their lives, driven either by desperation or by coming to terms with the constant barrage of negative economic news being the new norm. You can get tired of gloomy news, or get used to it, and indeed for some cash-rich buyers life has moved on to such an extent that it’s like the Lehman Brothers collapse never happened”.

Source: propertytalk Live!

State Bank of India to offer UK home loans

India’s largest lender, State Bank of India, is set to enter the UK residential mortgage market this year following the bank’s expansion of its international business, according to a Financial Times report.

Britain’s leading financial newspaper said the bank planned to take a conservative approach to lending overseas.

After nearly 90 years in the UK, SBI increased it range of services last year, growing its branch network from seven to ten.

Rajnish Kumar, head of State Bank of India UK, said that the financial crisis and subsequent increase in banking sector regulation had provided an opportunity for smaller banks.

“The market has become more prudent,” he said. “And this fits in with our model and what we want to offer.”

Click here to see the full FT article.

 

Gross mortgage lending records year-on-year increase

Gross mortgage lending in December was an estimated £11.7billion, according to the Council of Mortgage Lenders.

This represents a 12% drop from £13.2billion in November but a 12% rise from December 2010 (£10.5billion).

December was the fifth month in a row of higher year-on-year lending.

Lending totalled an estimated £37.3billion in the fourth quarter of last year, down from £39.2billion in the previous quarter but 11% higher than the last three months of 2010 (£33.6billion).

For 2011 as a whole, estimated lending totalled £140billion, slightly above the CML’s annual forecast of £138billion. This is up 3% from £136billion in 2010.

CML chief economist Bob Pannell said: “The closing months of 2011 saw stronger mortgage lending activity and housing transactions, despite the fact that short-term economic prospects are challenging.

“There is a glimmer of light ahead for households in that real incomes could stabilise and perhaps even start rising by the end of the year. But, continuing euro zone problems mean that mortgage funding prospects are uncertain, so overall UK mortgage market conditions for the year ahead remain difficult to call.”

Source: investortoday.co.uk
 

Confidence in UK housing market stable despite economic gloom

The 14th quarterly Property Tracker survey from the Building Societies Association shows that consumer confidence in the housing market remains remarkably stable, if far from booming, despite the gloomy outlook for the economy.

Consumer sentiment is a key indicator of future activity in the property market and provides an early snapshot of potential activity in 2012. A cross section of 2,069 adults across England, Wales and Scotland were asked for their views and intentions about home purchase in early December by YouGov plc.

Q: Is now the right time to buy a home? : 44% felt that now was a good time to buy compared to 25% who did not.  This is a slight improvement on March 2011 when 41% were positive about buying in the current market and 29% were negative.

Q: Do you intend to buy a property in 2012? : Overall, 12% of respondents intend to buy next year whereas 63% said that they had no need or desire to move in 2012 and 17% said that they would not be in a position to move.  Only 8% were put off moving for some reason such as the outlook for jobs or the size of deposit required.

Q: What are the barriers to buying a home? : Challenges remain in realising intentions to buy. The most common barriers cited by respondents are: raising the deposit to buy a property (64%), obtaining a large enough mortgage (57%), and unsurprisingly in the current environment, fears over job security (54%).  Far fewer see the potential for future house price falls as a barrier (21%).

Q: What do you think will happen to house prices in the next year? : Views are mixed with 33% overall expecting prices to rise compared to 28% who believe that they will fall and 20% who see them staying the same.

Commenting on the results, BSA Head of Mortgage Policy, Paul Broadhead said: “Although there has been a stream of gloomy economic news recently, and the uncertainty about the Eurozone has increased dramatically, consumers’ views on the housing market remain remarkably solid. Many people believe that it is currently a good time to buy, and about one in eight (12%) will be looking to enter the market or move in 2012, especially in London where 21% intend to buy.

“Government policy announcements such as the new build indemnity scheme indicate how important the housing market is to the UK economy, so the fact that confidence is not weakening is reassuring. More is in the pipeline to help break down the barriers to home ownership, although this must always be tempered with a responsible approach to lending as home ownership is not always the most appropriate choice for everyone.

“So far this year building societies and other mutual lenders have supported those who have wanted to buy property, with gross lending by mutuals up 15% year on year, while across the rest of the market mortgage lending is slightly down.”

Let us know your views, post your comments below.

Source: propertytalklive.co.uk
 

UK lettings market to perform well in 2012 – RICS

The UK lettings market will “perform well” through 2012, according to the latest RICS Housing Market Forecast.

Demand for rental properties remained strong throughout 2011, as many first-time buyers were unable to access the sales market. This looks set to continue over the coming 12 months. However, the gap between demand and supply is shrinking, suggesting that the increase in rental values may begin to slow as the year wears on.

Sales of homes may rise a little but prices will struggle to follow suit. Prices at a headline level will edge lower by around 3% across the UK. However, the low level of supply should continue into the coming year, stabilising prices and preventing significant declines.

Transaction levels are likely to see a slight resurgence next year and climb back to around 880,000, roughly the level of activity recorded in 2010. However, to put this in context, total sales in 2006 were almost double this amount at 1.67 million.

The weak economic picture anticipated for the next six months, along with the prospect of increased unemployment, means that demand to purchase property is unlikely to see any significant increase and will remain relatively flat. While the Government’s recently announced mortgage indemnity scheme is designed to help up to 100,000 buyers onto the property ladder, this is likely to have limited impact as it is restricted purely to new-build properties.

Simon Rubinsohn, RICS Chief Economist, said: “The general economic climate is likely to be the biggest influence on the residential property market next year. Prices could edge a little lower as unemployment continues to rise. However, the lack of supply in the market is likely to prevent any significant house price declines.

“Transaction levels should see a slight increase, although mortgage lending is likely to remain subdued which will limit the scope for improvement. As a result of this, the lettings market will remain firm which means that rents are likely to increase further, albeit at a slower pace than in 2011.”

 

Consumers confident in property despite economy

Consumer confidence in the housing market remains remarkably stable – if far from booming – despite the gloomy outlook for the economy.

That is the verdict of the latest quarterly Property Tracker survey from the Building Societies Association. Consumer sentiment is a key indicator of future activity in the property market and provides an early snapshot of potential activity in 2012. A cross-section of 2069 adults across England, Wales and Scotland were asked for their views and intentions about home purchase in early December by YouGov.

Q: Is now the right time to buy a home?
44% felt that now was a good time to buy compared to 25% who did not. This is a slight improvement on March 2011 when 41% were positive about buying in the current market and 29% were negative.  The results showed some interesting age and regional variations reflecting the mood of the country.  The over 55s had the most positive view of the current market with 54% saying that now was a good time to buy.  Conversely the 18-24s were the least sure with 32% agreeing it was a good time to buy. The public in Scotland and the South East and North East regions were the most positive about the market with results above the national total at 49%, 48% and 47% respectively.  Surprisingly consumers in London were among the least positive with just 42% believing that now was a good time to buy.  This may reflect the higher house prices in the capital.

Q: Do you intend to buy a property in 2012?
Overall, 12% of respondents intend to buy next year whereas 63% said that they had no need or desire to move in 2012 and 17% said that they would not be in a position to move. A further 8% were put off moving for some reason such as the outlook for jobs or the size of deposit required. Perversely when compared to views about the market the over 55s have the least intention to buy next year at just 8% with the 24-34s having the highest intention to buy in the next 12 months (21%).  Looking across different regions, Londoners had the greatest intention to buy next year, with 21% saying that they intend to purchase property. The regions where intentions are next highest are the West Midlands (16%), the South East, and Yorkshire and the Humber (both 15%). In contrast, those in Wales (5%), the North East (6%), and the North West (7%) have the least intention to buy in 2012.

Q: What are the barriers to buying a home?
Challenges remain in realising intentions to buy. The most common barriers cited by respondents are: raising the deposit to buy a property (64%), obtaining a large enough mortgage (57%), and unsurprisingly in the current environment, fears over job security (54%).  Far fewer see the potential for future house price falls as a barrier (21%).  There are a number of regional, gender and age differences in consumer views about the barriers to home purchase:

  • More men than women see the potential for falling house prices as a barrier to purchase, 24% compared to 18%
  • The 24-34 age group are the most concerned about their ability to raise a deposit at 70%, 6% above the national total
  • More women see job security as an issue with 57% of female respondents citing it as a barrier compared to 51% of men
  • The over 55s are however the most concerned about job security with 63% seeing it as a barrier compared to the national total of 54%.  The 18-34s seem least concerned about this factor at 46%
  • Of people who currently rent from their council/local authority 53% saw raising a deposit as a barrier, this compares with 68% among those renting from a private landlord and 62% from those renting from a housing association, perhaps reflecting positive views of the Government’s recent change to Right to Buy.

Q: What do you think will happen to house prices in the next year?
Views are mixed with 33% overall expecting prices to rise compared to 28% who believe that they will fall and 20% who see them staying the same. Men are more bullish than women with 35% expecting prices to be higher this time next year. It is telling, however that 36% of young adults (18-24) simply don’t know what to expect. Conversely the 50-54s who have seen house prices rise and fall before are the most positive with 37% expecting prices to rise, though the majority of this group expect it to rise by less than 2%. Regionally, consumers in the West Midlands and Scotland have the highest expectations with 38% and 40% respectively calling it in favour of price rises.  At the other end of the spectrum, only 23% of the respondents in the North East expect prices to rise compared to 31% who expect them to fall.

BSA Head of Mortgage Policy, Paul Broadhead said: “Although there has been a stream of gloomy economic news recently, and the uncertainty about the euro zone has increased dramatically, consumers’ views on the housing market remain remarkably solid. Many people believe that it is currently a good time to buy, and about one in eight (12%) will be looking to enter the market or move in 2012, especially in London where 21% intend to buy.

“Government policy announcements such as the new build indemnity scheme indicate how important the housing market is to the UK economy, so the fact that confidence is not weakening is reassuring. More is in the pipeline to help break down the barriers to home ownership, although this must always be tempered with a responsible approach to lending as home ownership is not always the most appropriate choice for everyone.

“So far this year building societies and other mutual lenders have supported those who have wanted to buy property, with gross lending by mutuals up 15% year on year, while across the rest of the market mortgage lending is slightly down.”

Source: investortoday.co.uk