Apr 8, 2011

English farmland price reach all time high

English farmland prices have reached an all time high as demand continues to outstrip supply and the market’s upward trajectory continues, the latest report shows.
Farmland prices in England rose by 4% in the first quarter of 2011 to an all time high of
£7,900 per acre, showing the strength of the market compared with others, like the housing
market, which is still weak, the report from Smiths Gore shows.
At the end of the first quarter, bare land values averaged £5,600 per acre, up 5% on the
previous quarter, whilst equipped land averaged £8,600 per acre, up 4% and another all time
high. Both bare and equipped land values have now recovered from the dip which followed the peak of the market in 2008.
‘Prices are still rising due to strong demand, from both farmer and non-farmer buyers, and the continuing low supply of land for sale,’ said Giles Wordsworth, head of Farm Agency at Smiths Gore.
Just over 16,000 acres were marketed in January to March, the same as last year. But the
constricted supply is more obvious when you look at the amount for sale in the six autumn and winter months.
‘You also appreciate just how small the market is when you look at individual regions, let
alone counties. There have been only two blocks of land over 50 acres for sale in the whole of the North East since Christmas,’ said Jason Beedell, head of research at Smiths Gore.

Some 92 farms and parcels of land over 50 acres were marketed in the first quarter of 2011. This is comparable with the same period last year of 86 farms and 48% more than during the equivalent period of 2009.
The report also shows that 16,100 acres were marketed in the first quarter of 2011, which is equal to the first quarter of 2010, and more than the first quarter of 2009 when 13,700 acres were for sale.
In the equipped farms sector, that is farms with buildings, some 60 equipped farms were marketed in the first three months of 2011, compared with 56 in the same period in 2010.
There was slightly less land marketed at 11,300 acres in the first quarter of 2011 compared with 2010 at 11,700. The area marketed was also comparable with the first quarter of 2009 when 11,100 acres were brought to market.
The average unit size in the first quarter of 2011 was 188 acres, smaller than the 208 acre average for 2010. In the bare land sector there were 32 parcels marketed in the first quarter of 2011, which is more than the same period in 2010 at 30 properties. Some 4,900 acres were marketed in the first quarter of 2011, 9% more than in 2010 at 4,500 acres.

Mar 29, 2011

UK prime country house market sees prices rise in first quarter of 2011

Prices of UK prime country houses rose in the first quarter of 2011 by 0.5%, partially reversing some of the prices falls in the second half of 2010, the figures published today (Tuesday March 29) show.

With prices of prime London property having risen by 30% since March 2009, buyers coming out of the capital are beginning to have an effect on the prices of the best country properties, according to the Knight Frank Prime Country House Index covering the first three months of 2011.
It also shows that price growth in the country is still not evenly spread, with slight falls recorded in the North and Scotland, and the strongest growth, 1% and 1.2% respectively, recorded in the South East and the South West of England.
With low stock volumes and ongoing strong interest from London based buyers, further price growth in the counties around London should be expected over the spring and summer.
‘The UK housing market has been experiencing difficult conditions since the middle of last year, and the prime country house market did not escape this trend. Prices fell in the second half of 2010 across most regions,’ said Liam Bailey, head of residential research at Knight Frank.
‘However, the revival in the London market since the autumn has begun to filter through to the country house market. With foreign buyers happily buying over 50% of central London £2 million plus properties, some of these vendors are now looking to move into the country house market,’ he explained.
‘For London buyers, moving to the country at the current time makes a lot of sense. Prices in London are 30% higher then they were in March 2009; in the country prices are up only 7% over the same period. In short, this means that someone selling in London and moving to the country has more than 20% additional spending power now compared to two years ago,’ he added.
He believes that while we ought not to expect rapid price growth from this point, it would seem fair to assume that the best country house properties will see further rises over the next few months.
According to Rupert Sweeting, head of the country department at Knight Frank, there is an imbalance of supply and demand in the prime country property market and a shortage of supply is becoming quite acute in some areas such as the Cotswolds and Oxfordshire.
‘We are confident that prime houses that are sensibly priced will attract considerable interest. Price rises for the best of the best are likely to occur and those vendors who go to the market now will be well rewarded,’ he said.
  ‘The ripple effect from London is spreading, albeit very slowly. Prices within a two hour radius of London are creeping up, however, more than two hours away from the capital it is not so straightforward. Buyers from London will get more bang for their buck the further they go from London,’ he added.

Mar 22, 2011

UK residential property rents edged higher in the first three months of the year

Nearly a third of British landlords increased their rental income across their portfolios in the first quarter of 2011, research from buy to let mortgage specialist Paragon has revealed.
It found that 32% of landlords have raised rents across their portfolios during the period and one in 10 landlords said that rental income across their portfolio rose by up to 2%.
A further 10% said that their income rose by between 2% and 4%. However, nearly 5% of respondents said that rental income had risen by more than 8%.
‘Supply and demand dictates rental pricing and landlords are experiencing significant tenant demand for their properties at present. Obviously landlords do not want to make rented accommodation unaffordable, but a considerable proportion of them have been able to make small increases to their overall rental income during the first quarter,’ said Nigel Terrington, Paragon Group chief executive.
‘Government figures show that nearly 300,000 extra households moved into privately rented accommodation in England alone last year and that is placing increasing strain on stock in the sector. It is encouraging that buy to let lending increased by 22% during 2010, but more needs to be done to ensure that the private rented sector can expand to sufficiently meet tenant demand,’ he added.
Meanwhile, Landlord Action, an organisation specialising in tenant eviction, has been approached my Mike Weatherley MP, to support an Early Day Motion which calls for squatting to be criminalised. The Early Day Motion has already been backed by 19 additional MPs from both sides of the House.
Landlord Action is calling on home owners to support the campaign in two ways.  Firstly, by signing a petition which will be presented on 04th April at Downing Street, and secondly, by writing to their local MP encouraging them to back the campaign.
Essentially, squatters consume services that they have not paid for. Many would feel that it is wrong. We have been advocates of homeowner rights for over ten years, and we have seen the situation getting worse. It is reassuring to see that MPs such as Mike Weatherley are taking action to help the situation,’ said spokesman Yogesh Chandarana.
A spate of high profile, well publicised cases have brought squatting to the forefront of the National press recently, highlighting the growing injustice being done to homeowners by squatters, many of whom travel thousands of miles to engage in squatting knowing they will be protected by the law.
In one example, squatters in Brighton made a freedom of information request to see which council homes were empty. An obvious strategy to target homes, it clearly demonstrates the level of organisation that squatters are now achieving, added Chandarana.
‘The problem is that squatting is not a criminal act so they get evicted from one home and simply move on to another, to then be evicted and evicted and evicted. Brighton and Hove has been plagued by a number of repeat squatting cases and in at least the last seven years, police have made no squatting prosecutions due to the difficulties in obtaining evidence where technical criminal infringements have been made,’ said Weatherley.
‘We need to criminalise this act so these people can be held to account for their actions and we hope that the recent media attention around this topic will drum up enough support for the EDM to be submitted for debate in the House of Commons,’ he added.

Mar 14, 2011

Wait and see property investors to capitalise on discounted overseas property

Thousands of people delayed buying property during the recession and may now benefit from discounted  overseas real estate prices which have dropped by up to n40% in popular destinations, it is claimed.
Lloyds TSB International suggests that many investors who delayed buying property overseas during the recession may now enter the market again due to a significant fall in prices and a renewed confidence in property markets.
Research reveals that prices in many parts of Spain, and other key overseas property locations have plunged by up to 40% in the last three years and that British investors have been adopting a ‘wait and see’ approach with mortgage sales remaining sluggish in some parts.
But new data from the National Federation of Estate Agents in France shows house prices increased in France in 2010 for the first time since 2007 and recent research by Germany real estate group, IVG2, suggests house prices in Spain may recover sooner than expected and faster than the rest of the economy.
'Key markets that were over heated in 2007, like parts of Spain and the US, are now buyer’s markets with many heavily discounted deals available,’ said Barry Luhmann, head of lending at Lloyds TSB International.
‘Many people preferred to wait and see how the markets and their finances would be affected by the recession, but after this recent lull in activity we expect interest in overseas property to return, possibly quite strongly, as the economy improves. Indeed, there are already signs that interest is picking up,’ he explained.
'To draw a comparison, sales of luxury cars fell heavily during the downturn as confidence drained from the economy. But many of the people who delayed their purchases by a year or two contributed to a strong year of sales in 2010.
We predict a similar phenomenon in overseas property to at least some extent. All of our market research points to the fact that many people in Britain still aspire to buying an overseas property, but a lack of confidence in personal finances and property market stability is holding them back for the time being,’ added Luhmann.
Average prices in Spain have dropped by 23% since their peak in 2007, while in key tourist destinations such as Ibiza and Costa Blanca, prices have fallen as much as 40%, which has spurred the Spanish government to appeal to British buyers to return. Similarly in Italy and New Zealand, prices have dropped by as much as 25% since 2007.
In recent years it has become more difficult to obtain an international mortgage deal with interest rates and customer service varying quite considerably across the market. This underlines the importance of obtaining the best deal and service, and Lloyds TSB International has now been voted the Best Overseas Mortgage Lender by consumers for four consecutive years.
The bank has been lending to customers for international property purchases for over 30 years, longer than any other major UK bank. It also lends in more countries than any other major bank.

Mar 13, 2011

Not much hope of recovery in the bottom sector of UK property market

The history of the UK property market is repeating itself as the traditional market leaders once again outpace the historic laggers, both in terms of house price growth and transactions, new analysis from Savills reveals.
Lucian Cook, director of research at the property adviser, has analysed fifteen years of Land Registry data and identified the locations which lead and those which lag over the course of a cycle of price growth, including the period when they emerge from a downturn, to see if history can tell us what to expect next in this recovery phase.
‘There is now a certain inevitability built into the market. The schism between the best and the rest is expected to continue to grow as the recovery progresses.  Ironically, it is the least affordable but most affluent areas that are leading, and will continue to lead the market both in terms of price growth and activity levels,’ said Cook.
‘For a long time we have known that certain areas of the country, typically located in London and the South East, lead the recovery before the laggers, often the northern metropolitan areas, catch up. Our analysis shows us that the recovery ripple usually takes between five and ten years to spread across the country as a whole,’ he added.
Values in the leading 10% of the country grew by 7.5% over the past year and are now just a fraction off peak levels, while the bottom 10% of areas saw prices fall by 3% and are almost 20% off peak.
This pattern is expected to translate into a significant outperformance by the top tiers in the short to mid term.  The Savills forecasts anticipate that the top areas will see prices rise by a third over the next five years, while the bottom end of the market will struggle to see any price growth.
During the period from 2000 to 2005 the bottom tiers of the market rebounded strongly and outperformed the traditional market leaders, with 123 per cent price growth compared to just 43 per cent for the top slice of the market. ‘However, they started from a low base and factors such as low levels of equity, mortgage scarcity and poor economic indicators mean that growth ultimately proved unsustainable,’ said Cook.
‘There is a real question mark over whether the bottom end of the market has the capacity to outperform in the second part of this cycle, particularly if we have an ongoing mortgage constrained environment with greater regulation and different lending criteria applying to equity rich and equity poor borrowers,’ he explained.
Average prices in the top 10% exceed £410,000, more than eleven times the average household income, while average prices in the bottom 10% have slumped below the £100,000 mark, under five times the average household income.
Even at this apparently affordable level the bottom tiers of market do not have the potential to bounce in line with the top end. Its recovery may only be possible if and when mortgage lending frees up, or as investors start to see potential in the local private rental sector,’ he added.
The list of top performers from 1995 to 2010 is totally dominated by London boroughs, while the laggers tend to be northern locations with low levels of affluence and a traditional industrial heritage.
Yet there are distinct variations within regions. For example, Windsor and Maidenhead leads the market much in the same way as a prime area of London, whilst Brighton acts like a London borough. Through the South East, the ripple effect flows quickly into Surrey and Berkshire but with less speed into East Kent or Essex.
The study also highlights areas of the country which perform more like the capital and its commuter hinterland than their own region. Locations like Bath and North East Somerset and Cambridgeshire and the Cheshire belt from Altrincham to Alderley Edge are clear leaders as if they were located in the South East.
It is also clear that there are regional market leaders such as Solihull in the Midlands, York in the North and the Cotswolds and City of Bristol in the South West.

Mar 11, 2011

Public split over future of UK property

The general public in the UK are split regarding the direction of property prices over the coming 12 months, according to new research from the Worldwide Property Group.
The results of the company's monthly confidence tracker survey reveals that 37% of respondents believe that house prices will rise over the course of the year whilst 35% are of the opinion that prices will remain static. Some 28% indicated that they are expecting prices to fall during this time.
The survey, which was conducted throughout February, also revealed some interesting figures on the subject of interest rates, a subject which has begun to receive a great deal of media attention in recent months.
A huge 77% of those who took the survey believe that rates will increase during the next 12 months, although two thirds of these are not expecting any more than a half percent increase in total. This lends weight to the market expectation that rates are set to rise relatively soon. Interestingly, 5% indicated that they anticipate a further reduction in interest rates during this time.
Overall, confidence in both domestic and overseas property continues to ride high with 72% of the opinion that right now is a great time to buy a property in the UK. 77% feel that this is also a good time to make a foreign property acquisition and this represents the first time since the survey began in August 2009 that overseas property has received a higher confidence rating that the UK. 69% indicated that they are currently considering an overseas purchase with the United States still firmly in the number one spot.
Some 69% of those who responded to the survey placed property as their first investment choice, some way ahead of gold in second place with 22% of the vote.
‘The results of this survey show that, in general, people are expecting house prices in the UK to further consolidate during the course of the year,’ said Kevin Wilkes, managing director of the Worldwide Property Group.
‘The UK market has fared pretty well during the recent economic storm with minor declines compared to the likes of some other countries, the USA and Spain being obvious examples. The continuing stability of UK house prices is good news and I don't foresee this being impacted in anyway by minor rises in interest rates,’ he explained.
‘Affordability for first time buyers has improved substantially in the last few years, whilst for second home buyers there has not been a better time for many years to make that purchase. For property investors there is currently a whole world of unbelievable opportunity,’ he added.
Meanwhile, the decision by the Bank of England's Monetary Policy Committee (MPC) to keep the base rate on hold at 0.5% for a full two years should not lull borrowers into a false sense of security as rates will rise soon, according to Simon Gammon, head of Knight Frank Finance.
‘In February three members of the committee voted to raise rates, and I would not be surprised if that number had increased further when we get the minutes of this month's meeting. The MPC has nine members so it would only take a small swing in sentiment for those voting for a rise to be in the majority,’ he said.
‘Although there is a feeling that lenders have already factored an increase in the base rate into their own rates, I would not take that for granted. As soon as rates do rise there will be a rush to lock into longer-term fixed rates before any further increases. This will inevitably lead to the best deals disappearing quickly and, from a purely commercial view, will allow lenders to increase their margins,’ he explained.
'The average five year fix has already edged up to about 5.5%, almost 200 basis points higher than the markets low point of around 3.7%. Now is absolutely the time to take expert advice and review your borrowing arrangements, I think this is just the start. There is likely to be a rush for longer term, fixed products and the best deals will not be around for long. The lenders offering the most favourable rates will be deluged with applications meaning service levels could also slip and customers may not get the rate they were hoping for,’ he added.

Mar 9, 2011

UK residential property market diverges as London outperforms rest of country

Widening regional variation in the UK’s residential property market became increasingly noticeable during February, led by an improvement in London, while large parts of the North, East and Midlands continued to experience a more downbeat picture, according to a new report.
The Royal Institution of Chartered Surveyors February Housing Market Survey shows that London was the only region to record a positive reading for house prices with 14% more chartered surveyors reporting prices rose rather than fell. This is in direct contrast to the national picture where 26% more saw prices fall rather than rise.
However, although negative, the headline net price balance has now improved for four months in succession and stands at its best level since July last year. Significantly, 12% of respondents, nationally, reported rising prices in February compared with 7% in January, the highest proportion since June last year.
Newly agreed sales, a good indicator of market activity, were most positive in London, the South West, Yorkshire and Humberside and Scotland. Elsewhere, the East of England, East Midlands and Wales experienced particularly negative readings, suggesting a more downbeat picture in those regions. Surveyors continue to report a lack of buyer confidence is affecting the market.
Overall demand for property remains at historically low levels, with a net balance of -1% reporting falls in demand. Buyer interest continues to be affected by high deposits required by lenders and fears over rising interest rates, the report also shows.
Despite this, some areas of the UK saw demand grow during February. In Scotland new buyer enquiries rose sharply to +31%, while London and the North East also saw increases in demand, +29% and +13% respectively.
'Across the UK, sales expectations look slightly stronger for the next three months, with 12 per cent more surveyors predicting rises not falls in activity; that said, transaction levels are still unusually flat. However, highlighting the wide regional variation, the West Midlands, North West and Yorkshire and Humberside recorded negative forecasts for future sales,’ said RICS spokesman Jeremy Leaf.
'Nationally, price expectations remain more downbeat, remaining in negative territory for the ninth consecutive month, at -28%. Only London surveyors predicted prices would rise over the coming months,’ he explained.
‘Despite the more positive picture for some parts of the UK, the general mood is still a little flat. Broad trends in the survey indicate an increasing variation in the housing market across the UK with London and to a lesser extent the South East operating in a very different orbit. Rather ominously, we have probably yet to feel the full impact of the public spending cuts which are likely to lead to further divergence in the regional property market,’ he added.

Mar 8, 2011

Property experts upbeat about London residential real estate market

London is expected to continue to be a mandatory location for super rich property buyers, partly due to its reputation as a global financial hub and also because of its outstanding schools and universities, it is claimed.
Such attributes act as a magnet to wealthy oversees investors, many of whom purchase apartments/investments in London for offspring to reside in whilst studying in the capital, according to Mark Pollack, director of Aston Chase, and a member of fabricproperty.com that has done a survey to find out what experts predict for the UK Spring real estate market.
‘With the bonus season upon us, St John's Wood represents a perfect location for Canary Wharf based buyers due to the fast Jubilee line underground link not to mention the ASL (American School in London) and the presence of the American Ambassadors residence in Regent's Park surrounded by the largest outdoor sports area in London,’ he pointed out.
‘This is likely to be further compounded by recent events in the Middle East, which will inevitably result in an increased demand for homes in cosmopolitan safe and stable locations such as London,’ he added.
Marylebone is likely to be popular, according to Graham Harris, director of Harris Latner. ‘More and more buyers and renters are finding their way to the area and the result is a fast depleting stock availability of all shapes and sizes. If this continues at the same pace, we predict a rise in Marylebone property values during March to May 2011 of between 3 and 5% and possibly much more for certain types of property,’ he explained.
‘Demand is being generated from the UK and abroad, in particular we are recording an unusually high number of overseas enquiries specifically from investors looking to secure a central London base for use in the future by themselves or their children that can be let in the meanwhile. Typical Marylebone residential rental yields are currently running at between 4% to 5% gross. The rental market in Marylebone is very strong at all levels and in many respects it could be argued that the demand from renters is even higher than from buyers,’ he added.
Trevor Abrahamsohn, managing director of Glentree International believes that investors will return to the market this Spring. ‘Despite the gloomy economic outlook it is my prediction that residential property, the old favourite, is going to be one of the most cherished investments of the year in London, with prices rising by about 5%,’ he said.
‘It looks like interest rates will remain within half a percent of present levels until the end of the year.  New developments are few and far between as obtaining funding for them is still very difficult and the planning process is still as strangulated as ever. Buy-to-let investors are choosing residential investment over pensions and, at the same time, rents are rising by at least 10% in London,’ he explained.
'There are fewer and fewer properties available in any price range and that is having an upward effect on prices. There is still time to lock in a long-term fixed rate mortgage and although interest rates will undoubtedly rise over the next few years, if you are in secured employment, there is no better time to invest in your own property and build up a tax free asset that one day could be your pension,’ he added.
Other properties expected to do well include those with access to communal gardens and with parking. Also attributes like a balcony or terrace could be good selling points.

Mar 4, 2011

Halifax says UK property prices fell last month

UK residential property prices fell 0.9% last month and fell at their fastest annual rate for 16 months as faltering demand continues to put downward pressure on the real estate market, according to the latest index, published today (Friday March 04).
The Halifax index shows that prices were 0.4% lower in the three months to February and on an annual basis have fallen 2.8%m making the average house price now £162,867.
But the index flies in the face of two other reports from earlier this week showing that property prices in the UK have edged upward in both January and February.
The January data from the Land Registry’s flagship House Price Index shows that prices increased 0.2% from December and the February index from the Nationwide Building Society shows that prices in the UK increased by 0.3% and are now just 0.1% lower than a year ago.
Halifax said that with prices 2.8% lower than a year ago as measured by the average for the three months to February against the same period a year earlier, this is the biggest annual decline since October 2009 and sales remain low.
Also the number of mortgages approved to finance house purchase, a leading indicator of completed house sales, increased by 7% between December and January on a seasonally adjusted basis, according to Bank of England industry wide figures. Despite this increase, approvals remain historically low with the total number in the three months to January being 4% lower than in the preceding three months.
The decline in properties coming onto the market continues. The latest Royal Institution of Chartered Surveyors survey showed a reduction in new seller instructions for the fourth successive month in January. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.
'There has, however, been little change in house prices over the first two months of 2011 as a whole.  February's monthly decline of 0.9% offset January’s 0.8% gain. Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,’ said Martin Ellis, housing economist at the Halifax.
‘Fewer properties have been coming onto the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices,’ he added.
Most economists reckon house prices will fall this year as tight credit conditions and a weak economic recovery deter homebuyers. Howard Archer, economist at IHS Global Insight expects house prices to fall by around 5% in 2011 and ultimately decline by around 10% from their 2010 levels.
'It is clear that critical to the development of house prices over the coming months will be the amount of houses coming on to the market, mortgage availability, how well the economy and jobs hold up as the fiscal squeeze increasingly kicks in, and what happens with interest rates,’ he said.
Paul Hunt, managing director of Phoebus Software said that although these figures show house price growth has been flat since the beginning of the year, given that the Halifax index is compiled through the number of approvals it makes, the sample size may be partly to blame for this volatility.
‘The valuable message from this index is that sustained growth is unlikely to return to the wider market until mortgage lending picks up. While most house price indexes showed small price increases last month, this will not become sustained growth until doubts about rising inflation and unemployment are lifted from lenders’ minds,’ he explained.
‘While I am sceptical that prices have been moving as much as Halifax suggest, it’s worth remembering that market activity remains subdued and this will keep a check on prices as the year goes on,’ he added.

Mar 3, 2011

Investors in London 'will see rising prices'

Investors in high end property sales and rentals in London are likely to note an upward fluctuation in house prices this year.
According to Naomi Heaton, chief executive at London Central Portfolio, homebuyers could benefit from investing the capital.
"Whilst prices in London central have increased by around ten per cent in 2010, they are not far ahead of where they were pre-credit crunch. Over the last 40 years, the average growth rate has been 8.5 per cent per annum. As such, there are two years of lost growth to make up on top of the annual average," she noted.
"London central is also continuing to attract investors due to the continued weakness of sterling and the enduring appeal of the capital," Ms Heaton explained.
Her comments come after the latest figures from Knight Frank show prime London property prices rose by one per cent in February 2011, which helped drive annual growth to eight per cent.

Mar 2, 2011

House prices edge upwards in February

New research suggests that average UK house prices increased slightly last month, which may be encouraging to some of Britain's homeowners.
According to the latest House Price Index from mortgage lender Nationwide, residential property values typically rose by 0.3 per cent in February.
Despite the modest improvement, average UK house prices remain approximately 0.1 per cent lower than at the same time in 2010.
Robert Gardner, Nationwide's chief economist, said that the overall picture was still one of a market "treading water".
He commented: "This shouldn't come as too much of a surprise. Housing market trends are closely linked to wider economic prospects.
"Given that the recovery hit a soft patch at the turn of the year and looks set to remain sluggish in the year ahead, the property market is likely to follow suit, with relatively low transaction levels and prices moving sideways or modestly lower through 2011," he added.
The expert went on to say that demand for homes had "levelled out", supported by historically-low interest rates and stabilisation in Britain's jobs market.
He warned that prolonged economic uncertainty was likely to keep many potential buyers "on the sidelines" for some time to come.
"Nevertheless, there are few signs of a glut of unsold homes building up on the market. Sellers remain reluctant to accept lower prices to secure a sale.
"In fact there are tentative signs that the volume of homes coming onto the market is slowing," said Gardner.

Mar 1, 2011

Call for rating websites with online feedback for UK’s private property sector

A ratings website for private renters with online feedback could help show bad landlords the door, according to proposals from a consumer watchdog.
In the UK private rented sector generates more complaints than almost any other and according to a new report from Consumer Focus, one of the biggest issues is that private renters often know very little about their landlords before signing a tenancy agreement.
Now the watchdog has written to some of the largest letting agents and deposit schemes in England calling on them to explore how online feedback could empower tenants by giving them a better insight into their potential landlords.
The new report, Opening the door, outlines the information imbalance which works against consumers in the private rented sector. Just 15% of tenants surveyed were able to find all of the information they wanted about a prospective landlord or letting agency. Over a quarter could find very little or even no information and a third who had found information obtained it from the landlord themselves.
By contrast, says the report, landlords or letting agencies can ask tenants for references, deposits, guarantors or other personal and financial information.
Almost nine in ten renters agree that a website to share experiences of landlords would help them to make better decisions before signing a tenancy agreement. Renting is one of the biggest financial commitments consumers make, with private sector renters paying an average of £816 a month for a one bedroom home and this rises to £1,406 in London.
Yet, Consumer Focus research shows that over a quarter of renters had cause to complain in the past two years, making the private rented sector the second most complained about market.  Many of the 1.1 million households who sign up for a new tenancy experience problems with their landlord which only become apparent after signing a legally binding agreement.
Reputational regulation has worked well in other sectors with commercial sites, such as EBay or Amazon, displaying consumer reviews and feedback to people have access to a range of information before they make a decision on what to buy. Consumer Focus believes that a similar site based on constructive feedback could help solve the information imbalance and help people seek out more reputable landlords and avoid the bad ones.
Research by the consumer champion has found that websites where consumers share experiences are influential and that, perhaps surprisingly, most people leave positive not negative feedback. The site would also reward and incentivise the better landlords in what is a rapidly growing market.
‘Currently the landlord is firmly in the driving seat despite rent being a massive outgoing for many of us. People often sign up with little more than a gut feeling after a cursory tour of the property, if they are lucky, they might have a word of mouth recommendation. The best way to help private renters is to ensure they have the information to know what they are getting into,’ said Claire McAnulty, policy expert at Consumer Focus.
‘There is huge potential for a feedback website to give tenants a better idea of whom they're renting from. Getting behind a feedback website could also help the industry establish a better reputation and build up much needed trust with renters,’ she added.
In 2008, the last Government published a review of the Private Rental Sector in England. The Rugg Review concluded that there is a supply and demand imbalance, particularly for properties affordable for tenants on low incomes. As a result, there will be a continuous demand for properties even if they are owned by landlords with a bad reputation.
Consumer Focus' report argues that for this reason market forces alone cannot be relied upon to ‘regulate the sector.
To help address consumer protection issues in the private rental market, Consumer Focus said it would like to see the introduction of a pilot tenant feedback website, ideally in conjunction with one of the tenancy deposit management schemes. With input from tenant and landlord bodies a successful pilot would ensure that a robust, balanced and large scale scheme could be taken forward in the long term. Initial support would be needed from a third party to fund and independently evaluate the pilot website.
It would also like to see a minimum common standard and quality mark to be introduced for all private landlord accreditation schemes. There are at least 80 different types of voluntary schemes operating in England, meaning the standards that landlords must meet vary considerably. A common quality mark would act as a benchmark to reward good landlords and offer assurance to their tenants.

Private property rented sector increasing in the UK, new figures show

Almost one in six residential properties now rent privately, making the private renting sector a growing and vital component of the UK housing market, according to a new report.
The Communities and Local Government’s English Housing Report, shows that the number of households renting privately has risen by one million since 2005/06, from 2.4 million to 3.4 million in 2009/10.
It means that the Private Rented Sector now accounts for 15.6% of all households in England, up from 14.2% in 2008/09 and 11.7% in 2005/06. The figures also show that there has been a decrease in the number of owner occupied households from a peak of 14.8 million in 2005/06 to 14.5 million in 2009/10.
The proportion of households in owner occupation has been in decline since 2003, falling from 70.9% to 67.4% during the period. And the proportion of social renting households is also in decline, falling from 19.5% in 2001 to 17.0% in 2009/10.
Overall, social sector homes were in better condition than private sector homes. In percentage terms, the number of non-decent homes in the private rented sector has fallen from 46.8% in 2006 to 40.8%.
Some 60% of all private rented households are living in decent homes, up from 56% in 2008, whilst the energy efficiency of homes in the private rented sector has improved more over the period than the owner occupied sector
  Couples with no dependent children are the most common type of household in the PRS at 26%, with one person households under 60 being the second largest household type at 23%.

Lone parent households are more common in the private rented sector at 12% of private renters compared with 3% of owner occupiers. While half of all private renters are aged under 35 with half a million, some 15%, aged16 to 24 and 1.2 million, some 35%, aged 25 to 34, the report also shows.
The PRS encompasses a wide range of economic status with 60% of households being in full time employment, 9% in part time work, 7% unemployed, 8% retired and 11% classed as ‘other inactive’.
Some 24% of private renters receive housing benefit compared with 62% of social renters. There are 3.4 million properties in the PRS, 60% of which are located in suburban residential areas compared with just 4% in the city centre.
Nigel Terrington, chief executive of Paragon, the buy to let specialist, says that the new Government data backs up Paragon's long held view that the sector is of growing importance in the UK property market. ‘The CLG's figures highlight the growing number of people relying on the private rented sector to provide their housing needs. The sector's importance to UK housing continues to grow as increasing numbers of people opting to rent privately rather than step on the housing ladder,’ he explained.
‘Demand for privately rented property is at an unprecedented level and far outweighs supply. The resulting rental inflation is leading to people, including the most vulnerable households, being priced out of the sector at a time when the supply of social housing is in decline,’ he said.
‘With Capital Economics estimating that the private rented sector will be home to nearly one in five households by 2015, it is crucial that adequate levels of buy to let mortgage finance are available to enable landlords to expand the number of properties in the PRS,’ he added.

Feb 24, 2011

Cash rich buyers and lack of lending pushing Mr Average out of UK property market

Cash rich buyers seeking out bargain properties are likely to push down prices in the UK’s already hard hit locations, a new hard hitting report suggests.
The latest analysis of the property market published today (Monday February 21) from Rightmove paints a picture of a three tier market emerging.
It says that in the more economically depressed areas of the country forced sales are becoming more prevalent while in elite parts of London prices are rising. Then in the middle is Mr Average who can’t get a mortgage to buy.
Bargain hunting bottom feeder’ investors are expected to become more prominent in the second half of the year and will push prices down in the areas worst affected. And while there is evidence of growing competition to lend in this traditional first time buyer market segment, lenders are not looking to support the greater volume of deposit light first time buyers, it says.
Instead lenders are reportedly gearing up to chase the minority market of equity heavy buy to let investors but this means that mortgage funds are being denied to those who need them most. ‘Agents report that cherry picking lending practices are leading to some dysfunctional and desperate behaviour to solve housing needs,’ said Rightmove director Miles Shipside.
‘Some average sellers of yesteryear are now trading up by letting out their own home and renting the next rung up the ladder as they cannot get a suitable mortgage to sell up and buy a more spacious house. The accidental landlord is now being joined by the deliberate limbo landlord,’ he explained.
‘Meanwhile, professional investors are being funded by lenders to buy starter homes, condemning many of those who would have been first time buyers in the past to be permanent residents of the rented sector,’ he added.
The report also indicates that the number of new properties coming to market remains subdued as a substantial element of the mass market is locked in to their existing homes. Average unsold stock levels per agency branch have now declined for five consecutive months, falling from a peak of 78 properties to the current level of 69.
The main exception to muted new seller numbers is London, which is up 21% on the same period last year. ‘This is further evidence that the more elite and southern based markets have some immunity from the effects of stunted equity growth and problems accessing mortgage finance,’ added Shipside.
The remainder of the country has seen new listing numbers remain more stable, being marginally up by just 6% year on year on the same period last year.
Its report also shows that this month’s new sellers are mimicking last year’s February hike by increasing their asking prices by 3.1% to an average of £230,030, leaving year on year prices virtually the same, up 0.3%.
'Trends during the first six weeks of the New Year normally shed light on how the remainder of the year might pan out. The start of this year is very much a repeat of 2010 and so we expect 2011 to be characterised by what may well be the new norm, with the average buyer of yesteryear locked out of the market,’ said Shipside.
‘Any hopes that transaction volumes may be on the springboard preparing to return to historic norms will have been dashed by lenders’ predictions that 2011 lending volumes will match 2010’s dire levels. Mr Average will be left out in the cold in the buying and selling game unless the beneficiary of a hereditary hand out,’ he explained.
‘The current subdued market volumes are set to be the new norm unless the seemingly never ending discussions between Government and mortgage lenders find some way of increasing Mr Average’s access to lower deposit mortgages without pricing them out of the market,’ he added.

Feb 23, 2011

Demand and optimism in UK rental property market remains high

Demand for rented residential properties in the UK has hit a two year high but rents have fallen slightly for the second month in a row.
Four out of 10 landlords reported strengthening levels of tenant demand in the final quarter of 2010 and yields remain steady but voids fell, according to the latest Private Rented Sector Trends report from Paragon Group.
It also found that mortgage finance availability in the buy to let sector is improving but still scarce as the proportion of landlords reporting growing levels of tenant demand reached its highest level since the final quarter of 2008.
While the latest buy to let index from LSL Property Services shows that rents fell slightly in January compared with December but they are still 4% higher than a year ago and are showing signs of renewed growth in several areas of the country, according to the latest buy to let index.
Average rents fell to £682 per month as increasing investment pushed up supply, the index shows. It also found that tenant arrears also declines but remain high with 11% of all UK rent in arrears and total annual returns declined again as annual house price growth declines.
This is the second successive month rents have fallen. The average yield fell slightly to 4.9% in January, as rents declined at a faster pace than rental property values.
‘The recent loosening in the buy to let mortgage market has boosted the supply of rental homes on the market, a crucial factor in the temporary drop in rents. In the last quarter of 2010, the number of buy to let loans leapt by 7% according to Council of Mortgage Lenders,’ said David Newnes, estate agency managing director of LSL Property Services, owners of Your Move and Reeds Rains.
‘With more products coming onto the market, there are signs that this trend is continuing into 2011, allowing a growing number of professional landlords to get onto the market, or broaden their portfolios, and take advantage of near record rental income and strong tenant demand. International investors, too, have played their part, looking to place their cash in UK bricks and mortar while yields look attractive and properties are affordable,’ he added.
Despite the slight decrease in rents, they are still 4% higher than a year ago - and are showing signs of renewed growth in several areas of the country. Rents in the East and West Midlands increased by 0.9% and 0.8% respectively, 0.8% in Yorkshire and the Humber, and 0.2% in London. However, the overall drop was driven by larger falls in the East of England, down 2.5%, Wales down 2.1%, the North West down 1% and decreases of 0.4% in the South West and South East.
But with the Paragon report showing that four out of 10 landlords said tenant demand grew during the quarter, compared to 36% during the third quarter, the proportion of landlords reporting growing levels of tenant demand has now risen for six consecutive quarters, which has coincided with a shortage of mortgage finance in the owner-occupied mortgage sector.
Just 4% of landlords said tenant demand fell during the quarter, the lowest proportion since the third quarter of 2008 and the second lowest level since Paragon started collating the data in 2004.
‘Tenant demand shows no signs of slowing down and in some busy markets, such as London, there is anecdotal evidence of sealed bids being used for certain properties. This will become more commonplace across the UK unless the PRS is able to expand to meet higher levels of demand. Four out of 10 landlords say that tenant demand grew during the period, which is a significant number and has major implications for renting in the UK if the issue of rental property supply cannot be addressed,’ said Nigel Terrington, Paragon Group chief executive.
The also found that there has been an improvement in the availability of buy to let mortgage finance with 19% of landlords saying that mortgage finance was either widely or reasonably available, up from 17% during the third quarter. Conversely, the proportion of landlords stating that mortgage finance was very restricted dropped from 29% in the third quarter to 26% in the fourth.

Feb 21, 2011

South of the River London property developments proving popular with Middle East buyers

Parents who swapped London for the Home Counties a generation ago in order to raise their children are heading back to the capital city, according to property consultants Cluttons.
With their children having left home for good and prices in some areas of London at a more affordable level than they have been for several years, Cluttons has seen an upturn in middle-age-to-retiree homebuyers looking to return to the buzz of a London lifestyle.
It said that the capital has changed considerably over the past five years, becoming more of a cultural centre with new improved public transport links. Many retired or pre-retirement age homeowners are moving back, giving up large homes with time consuming gardens to move to lower maintenance properties.
The South Bank has been especially popular for this market, with its ever changing river views and proximity to the growing number of cultural attractions, in addition to Borough market, renowned for its fresh produce and eateries, it says.
‘Traditionally, this stage of the cycle involves downsizing to release equity and relocating to a more rural or coastal setting. However, we have seen a growth among so called empty nesters, who are postponing their retirement dates and seizing the chance to return to London to rediscover a lifestyle they had at the beginning of their career,’ said James Hyman, partner for residential sales at Cluttons.
‘Many are looking to trade in their large detached homes with substantial gardens for apartments with good internal amenities and security such as porterage and based in locations easily accessible to the cultural attractions London has to offer,’ he explained.
Cluttons also said there is a new trend with Middle Eastern and other foreign buyers looking for residential property south of the River in London. Traditionally they look for property in prime Central and West London but new developments are catching their eye in and around London Bridge and Tower Bridge.
‘The new Shard development is helping to put the South Bank on the map for many overseas buyers but especially those from the Middle East who have now discovered the area’s potential. As development land in North and West London becomes scarce, an increasing number of commercial developments are being built south of the river. This has in turn drawn attention to previously lower profile areas like Shad Thames and the South Bank in general which now offer greater opportunities for price growth,’ said Hyman.
‘Considerably improved transport links and access to the City and West End as well as the kudos of cultural icons such as the Tate Modern, Globe Theatre and South Bank arts arena are now proving popular with these buyers,’ he added.

Feb 19, 2011

Rental properties are being snapped up across the UK

UK private rental properties are being let within 15 days on average - 5 days quicker than a year ago, reports the letting agent and property services group Countrywide.

The latest findings from Countrywide's quarterly branch survey reveals that there are an average of 4.4 tenants vying for each property across the UK; with the South West generating the greatest demand with an average of 5.9 tenants.

In Q4 2010 the number of new tenants registering for rental accommodation increased by 14% compared to the same period in 2009. Overall, the total number of new tenants registering for rental accommodation exceeded 200,000 last year - a record high; with new tenant registrations increasing by 37%, which peaked between July and September 2010.

Agents throughout the UK reported a significant lack of property supply with the average number of properties available to let falling by 29%.

Leading high street names took part in the survey, such as Bairstow Eves, Mann Countrywide, Taylors, Bridgfords, Abbotts, Gascoigne Pees, Slater Hogg & Howison, Entwistle Green and Fulfords, which confirmed that two bedroom houses remained the most sought after property type in the final quarter of the year.

The findings of the survey also revealed that the proportion of three and four bedroom properties entering the rental market has steadily grown across the UK - increasing by 3% over the last quarter and 2% compared to Q4 2009.

John Hards, Co-Managing Director of Countrywide Residential Lettings said: "The rental market has seen record levels of demand in 2010. In the final quarter, whilst we experienced the traditional slowdown, the continuing demand is seeing many properties in prime locations having new tenants secured within hours of coming onto the market.

"We are seeing a change in the demographic of tenants with a growing number of professional tenants emerging across the country, as affordability issues facing homebuyers that are unable to sell or raise the capital to buy their next home. These wider economic issues are reflected in our rental stock, with a growing number of 3 and 4 bedroom family homes entering the market but the greatest demand is for 2 bedroom apartments and houses which are still in short supply."

Regional Highlights

* South West: Studio flats and one bedroom properties were in greatest demand, making up 25% of the properties let in the South West during Q4 2010.

* South East: Apartments made up 48% of all properties rented -up 1% on the previous quarter. In comparison, in Q3 2009 apartments made up 36% of all properties rented.

* North West: First time landlords made up 25% of new landlords entering the market - up 8% compared to Q3 2010.

* North: 52% of small scale buy-to-let landlords let out their properties in the final quarter of the year - up by 22% compared to Q3 2010.

* East Midlands: 32% of all new rental properties coming onto the market were three bedroom properties - an increase of 4% on the previous quarter and a 2% increase on the same period in 2009.

* West Midlands: Demand four bedroom properties is the highest in the UK with an average of 7 tenants trying to rent every four bedroom property.

* London: This region saw the sharpest increase in the proportion of couples under 35 looking for rental accommodation, which made up 28% of all new tenant applications in Q4 2010 - up 9% compared to Q3 2010.

* Scotland: Four bedroom properties were in high demand with an average of 4.4 tenants trying to rent each rental property - up from 2.5% in Q3 2010.

* Wales: The properties most in demand were apartments, with 57% of all properties let in Q4 2010 being apartments.

UK property sector influences strength of Pound

The Pound has been making back ground following the steep drop bought on by the surprise contraction in GDP figures on Tuesday. Yesterday’s Bank of England minutes indicated that policymaker Martin Weale joined Andrew Sentence in voting for a 0.25 percent interest rate rise which will have aided Sterling slightly.
However an interest rate rise was not ear marked until August in the MPC minutes, which will serve to dampen some of the recent hype for an earlier increase which has pushed Sterling upwards. It is also significant that these were the minutes from two weeks ago coming before the shockingly low GDP figures – so the impact of GDP has not yet been dissected by the Bank of England but will come in the next meeting and set of minutes in February.
Weakness in the property sector has reared its head once more with a Hometrack housing report for December indicating a drop in house prices by 0.5 percent in December – a drop for the seventh month in a row.

Boom time for prime London property rentals, new research shows

The prime London property rental market is now characterised by severe stock shortages and very high levels of demand, a combination that will underpin the strong price growth seen in 2010, according to consultants.
Average rents grew by 11.5% in 2010, according to latest analysis from Savills research department. As a result, rents are forecast to grow this year by an average of 8% across prime London and 7% in the prime central zones. This compares to a 1% growth forecast for capital values across the capital this year.
Growth in 2010 was supported by a general lack of properties available to rent at a time when increased demand for rental property, particularly from corporate tenants, was recovering, Savills latest report says.
All areas show growth with North London, including Hampstead and Islington, leading the way with exceptional growth of 17.6% last year. Demand is running at an all time high in these areas, suggesting that 2011 will be a second year of very strong growth in rental values.
While rental growth increased 5.1% in prime Central London, 10% in prime South West London, 10.8% in prime East of City and 17.6% in prime North London.
‘Stock shortages persist which is good news for landlords. The dynamic of constrained mortgage markets, of buyers adopting a wait and see approach, a lack of new build supply, a return of corporate tenants, improving employment prospects and the reduction in accidental landlords, means that strong rental growth will continue to characterise the market in 2011,’ said Jacqui Daly, director at Savills residential research.
The research also shows that the lower tiers of the prime London rental markets have seen the strongest growth in 2010 as caution amongst tenants and reduced corporate allowances have concentrated demand for smaller properties.
In prime South West London the particularly strong sales market in 2010 reduced the supply of rental properties available as accidental landlords returned properties to the sales market. Additionally, needs based family demand has persisted, pushing rental values up. Both houses and flats saw similar levels of rental growth reflecting the broad tenant base and variety of budgets in this market.
The Savills Market Strength Indicator is a useful indicator of future price drivers. For prime central London the indicator is now 11% above its long term, four year average, while stock levels are 17% below the average. In south west London the market strength indicator is at +79%, with stock levels down 40%, creating an acute demand supply imbalance, suggesting that values could rise ahead of the market average this year.
‘We expect to continue to see a growing number of UK tenants at all levels and from all age groups and walks of life. Renting is now considered a perfectly acceptable way of life in the UK, whether you simply can’t afford to get on the housing ladder, want to try an area before buying or need to rent out your own home whilst renting a bigger/smaller one or in a different area to be close to schools or loved ones,’ said Jane Ingram, head of lettings at Savills.

Feb 17, 2011

New property search service for London launched

Buying a home can be an arduous task. Purchasers not only need to consider where they buy or how much they pay, but also the proximity to work, quality of the local schools, transport links and amenities.
In London the choice can be vast, according to Harrods Estates, which has just launched its new Property Acquisition Service which takes the stress out of finding the perfect home in the UK’s capital city.
It started in the Home Counties in November 2010 and following great success, has now expanded its service to London. The discreet bespoke service helps clients throughout the home buying process from the initial search to contract exchange and completion.
After a free no-obligation consultation, the acquisition agent will begin an extensive search that matches the client’s requirements, complete tours of the area and view a wide range of homes. The Agent will then short list the most suitable properties and present them to the purchaser.
Richard and Rebecka Clarke used the acquisition service to find their new home. ‘We were both working full time and Rebecka had just had a baby when we decided to move home. We were living in a three bedroom apartment in High Street Kensington and wanted something more suitable for our growing family. We had a clear idea of what we wanted, all we had to do was tell the agent and she did all hard the work for us. The stress and hassle was completely removed,’ said Richard.
The acquisition agents have an extensive knowledge of the property market and know the best places to invest as well as the best home to buy. The service offers great value for money; we actually saved money as we bought our home before it even went on the market,’ he added.
Shirley Humphrey, sales and marketing director of Harrods Estates said that with the average Londoner working a 40 hour week or more, it can be really difficult to find the time to search for a new home. The Property Acquisition Service enables them to brief the agent on their requirements and sit back whilst they search for a perfect property.
All searches are supported by detailed property reports. These cover both general data on the area such as market reviews, local schools and other amenities, and information specific to the property, such as land and planning reviews, advice on investment potential, estimates for development and refurbishment, rental forecasts and estimated running costs. The service also negotiates offers on behalf of clients and oversees the buying process through to completion, working with solicitors and third parties.
‘We offer a discreet and bespoke service to our clients, designed to cater to their every requirement, such as being near stables so their children can ride regularly or close to an airport if they travel frequently,’ explained May Rahmani, property acquisitions area manager for Harrods Estates.

Feb 15, 2011

UK commercial property markets showing modest improvement, according to surveyors

There is cautious optimism for the commercial property market in the UK as the sector shows further modest improvement although there are regional differences in both the occupier and investment areas, according to a survey published today (Tuesday February 15).
Some 18% more surveyors expected new sales and lettings to increase in the next three months, the latest Commercial Property Market Survey from the Royal Institution of Chartered Surveyors covering the fourth quarter of 2010 shows. It was a rise from the third quarter of +8 and is the best reading since before the onset of the credit crunch in 2007.
Meanwhile, 8% more reported a rise than fall in occupier enquiries, compared with -22 previously, suggesting that some businesses may now be looking to expand, the report says.
It points out that significantly, in the last three months of 2010, overall tenant demand for commercial property stabilised with a net balance of zero from -6. However, while the picture clearly is improving, surveyors continue to cite uncertainty over the prospects for the economy as a drag on the market.
Just 4% more surveyors saw an increase rather than a decrease in available occupier space, down from a reading of +16 in the third quarter. In the office sector, available space registered a zero net balance, the lowest since the fourth quarter of 2007. However, available space continued to edge up in both the industrial and retail segments of the market, albeit at a lesser rate, +5 and +4 respectively. Regionally, London experienced a sharp fall in supply of office space, while industrial property in the South and South East saw declines for the first time in three years.
With occupier demand broadly stabilising but available supply still nudging upwards, it is not a surprise that the headline net balance for rental expectations remained in negative territory in the fourth quarter, the report says. However, the overall reading for the office sector was slightly positive and it was particularly so in London. The net balance for rental expectations in central London climbed to +50 while across the rest of the capital, it jumped to +34.
Meanwhile, rental expectations fell back at the fastest pace in the South, and continued to decline across regional office and retail markets. The outlook for industrial rents remains relatively stable, however, and even improved in London and the South East, in part to the stronger manufacturing sector.
On the investment side, the survey shows respondents in London seeing capital values rising with the net balance increasing for the sixth successive quarter. By way of contrast the readings for the rest of the South, Midlands and North remain negative.
‘While it is true that some optimism is returning to the real estate world, the commercial market still faces significant challenges. Regional variations are becoming increasingly visible with the picture on rents and capital values broadly reflecting the emerging economic recovery,’ said Simon Rubinsohn, RICS chief economist.
'Prime London offices are, and will continue to be, the most buoyant part of the market. Meanwhile, secondary offices around the country are a particular area of concern as oversupply will be compounded by likely consolidation in the public sector. On top of this, the general lack of new projects being initiated outside of the capital has important ramifications for regeneration in large parts of the country,’ he added.