Over half of UK investors no longer view property as a good investment, according to a new survey commissioned by Rathbone Investment Management.
The introduction of an extra stamp duty levy as well as new regulations by the Prudential Regulation Authority affecting landlords has led to many investors re-evaluating property as an investment, according to Rathbone.
Those investors with over £100,000 of investable assets were slightly more optimistic about the property market, the research found, with only 38% viewing it as a poor investment.
The survey showed that a quarter of high net worth investors currently own buy-to-let properties; however, just 7% plan to increase their portfolio.
The Rathbone survey comes in the wake of research by the National Landlords Association which reported in January that 20% of its members planned to sell a property in their portfolio in 2018.
Robert Szechenyi, investment director at Rathbones said: “Recent changes to the tax and regulatory treatment of buy-to-let has caused investors to take a step back and assess the viability of these investments.”
Property has traditionally been a popular investment across the UK, with 49% of Britons surveyed by the ONS saying that investing in property instead of a pension was the best way to save for retirement.
However, Szechenyi said this may be about to change.
“Whilst it’s understandable that property, and in particular residential property, has been a popular investment in the past, it’s now making less and less sense,” he said.
“Not only are the returns now being impacted by an increased rate of tax, but they can also prove high-risk investments due to a lack of diversification.
“Property investments require a large amount of capital to be held in one single asset and landlords will often hold a number of properties within one region.”
The research from Rathbone comes as data from Rightmove published today found that asking prices in London were down 0.2 per cent in May compared to the same month last year.
While property demand has dipped in the capital, those selling in Bexley are faring better than most, according to online estate agent Emoov. It has been deemed the hottest spot for property demand in London at present in Emoov’s national hotspots index for the first quarter.
The index considers homebuyer demand levels based on the balance of stock listed for sale on major property portals compared with the stock that has already been sold.
London boroughs where property demand is highest
3. Barking and Dagenham
7. Waltham Forest
The index found that property demand across the nation has remained static since the fourth quarter of 2017, but it slumped 15% in London over the first three months of the year.The areas that have the highest number of properties sold from the total listed for sale are deemed the most in demand amongst UK buyers.
While Bexley, Bromley and Barking and Dagenham were deemed hotspots for property demand, there were other areas which reported the largest rise in demand since the fourth quarter.
Hammersmith and Fulham had the biggest increase in buyer demand – up 43% since the fourth quarter of last year. That was followed by Newham and Kensington and Chelsea, and then the City of Westminster, up 30% and 17% respectively.
London boroughs with the steepest rise in property demand
1. Hammersmith and Fulham
3. Kensington and Chelsea
4. City of Westminster
As for the London commuter belt, demand levels remained fairly robust but still dipped 5% in the first quarter. Ashford in Kent was home to the highest level of buyer demand, followed by Folkestone, Rochford, Stevenage, and Colchester.Lambeth was dubbed the least in demand area, followed by the City of Westminster, though interest from homebuyers has been picking up there, as well as in Southwark.
Emoov founder Russell Quirk said:
There are plenty of pockets across the nation that continue to see strong levels of buyer interest, however, market uncertainty has seen many sellers refrain from selling and in turn, the lack of varied stock has seen buyer demand remain restricted for the large part.
As we now enter the busiest period of the year for home sellers and buyers, we should see demand across the board stabilise and along with additional factors, such as the intended improvement in the regulation of estate agents, confidence will start to return to the UK property market.
MoD fails to ensure windfall profits are returned to taxpayer or development occurs, says opposition. Property companies have made millions of pounds by buying land from the Ministry of Defence and applying for planning permission, before selling on the sites. Sites with space for 55,000 houses have been sold off including Fort George in Scotland, two York barracks and five golf courses.
In several cases, no building occurred before the resale; on other sites, no development at all has occurred years after the original sales. In most cases, the MoD failed to ensure that any of the windfall profits were returned to the taxpayer.
Nia Griffith, the shadow defence secretary, said the transactions were appalling and the MoD should have ensured the developers could not simply sell the land on at a large profit.
“The absurd thing is that there is a mechanism when you dispose of land to claw back some of the profits,” said Griffith. “That is quite standard among local authority sales. It is bizarre that the MoD doesn’t do it.”
The property company IM Land bought part of the former MoD Ensleigh site outside Bath for £17.1m in June 2013. Within less than three years, approximately a third of the site was sold to housing developers for £11.3m.
Further smaller parcels of land have been sold for almost £10m and IM Land, which is owned by the Conservative donor Lord Edmiston, still owns around a third of the site.
Houses on the site are being built by Linden, which is part of Galliford Try, and Bloor Homes, which was founded by the Conservative donor John Bloor. The average house price rose by 23% between 2013 and 2016, according to Land Registry data.
A spokesperson for IM Group said: “MoD Ensleigh was acquired by IM Group following a full marketing campaign conducted by the MoD and their appointed advisors. This marketing campaign determined the open market value achievable for the site.”
In June 2013, RAF Brampton, just outside Huntingdon in Cambridgeshire, was sold to a Jersey-based company called JCAM Commercial Real Estate Property for £10.1m. Over the past two years, the land has been sold off in parcels for more than £28m. Part of the site was sold to the Metropolitan Housing Trust housing association for £14.5m.
Tim Leslie, the founder of JCAM, said his company had demolished buildings on the site and spent money on roads, as well as making payments of £7.3m through the community infrastructure levy and to the council.
“Buying land without planning permission is a risky business and, when successful, the returns should reflect that,” said Leslie. “Our gain will be in line with what we expect to make when we buy land and then achieve planning. Clearly, if the MoD had achieved a planning consent and then sold the land, they would have achieved a significantly higher price.”
Another former MoD site in Bath was bought by the property developer Square Bay for £12.5m in March 2013. It was sold on in March 2016 for £29m.
Square Bay was also involved in buying Fremington training camp in north Devon, which was sold in December 2010 for £3.4m.
The members of the partnership set up to buy the training camp, Fremington Developments LLP, included companies registered in the British Virgin Islands, Switzerland and Hong Kong.
In February 2014, three years and two months after the land was bought from the MoD, it was sold for £10.1m to Bovis Homes and a division of Barratt Homes.
Markham Hanson, a partner in Fremington Developments and the managing director of Square Bay, said the company had spent more than £1m to achieve planning permission on the Fremington site.
Hanson said the land had been bought on the open market, following a marketing campaign by the MoD. Hanson said: “We acquired the site without planning consent and with a high degree of risk attached due to the fact that the site had some challenging access issues that needed to be overcome, and a slow development market in the UK at the time.”
The sales come after the controversial purchase of thousands of MoD houses by Annington Homes, a company owned by a Guernsey-based fund managed by the private equity tycoon Guy Hands.
A MoD spokesperson said: “We look to achieve the greatest return for the taxpayer when selling land and have made over half a billion pounds in sales since 2010. Every penny is reinvested back into our armed forces.
“Applying for planning permission before selling land does not always provide the best value for the taxpayer. It can delay the sale, is not always granted and can restrict the freedom of potential buyers to develop the site according to their needs.”
London’s reputation as a leading financial centre has now extended to include the field of sustainability. A new Global Green Finance Index (GGFI) has found the city as the top destination for green finance, leading in both the categories of ‘penetration’ and ‘quality’.
The Index, launched by think tanks Z/Yen and Finance Watch, was compiled using survey data from finance professionals and over 100 relevant instrumental factors. These included human capital, infrastructure, legal, and policy factors.
It found that Western Europe scored the highest, featuring nine of the top 10 centres for the quality of its green finance offering, and seven of the top 10 for penetration.
Amsterdam, Luxembourg, and Copenhagen performed highly; Chinese cities were also strongly represented with Shenzhen, Guangzhou, Shanghai and Beijing all rated for green finance penetration.
Paris scored the highest for the centre most cited to become more significant in green finance over the next two to three years, followed by Frankfurt and New York.
The survey data provided 1,790 rating from 337 experts over a two month period from December 2017-February 2018. The survey will continue to run online and sampled every six months in future editions of the index.
Respondents were most interested in green bonds and renewable energy as areas of investment, followed by sustainable infrastructure investment and energy efficiency. However, divesting from fossil fuels, carbon disclosure and green insurance showed the least amount of interest.
In addition, the two main drivers behind sustainable finance were seen to be the enabling policy framework in place, taking in tax incentives, mandatory disclosure, and technological change; secondly, demand from investors, climate change, public awareness, and infrastructure investment.
Dr. Simon Zadek, Co-Director, UN Environment Inquiry into the Design of a Sustainable Financial System commented: “Ratings and indexes are important instruments to enable effective communication of relative and absolute progress, as well as encouraging a race to the top, and a healthy debate of what constitutes success and how it can best be measured. In this spirit, Finance Watch and Z/Yen have taken us all to the next level in providing us with the first globally applicable index of developments in greening the world’s financial centres”.
Professor Michael Mainelli, Executive Chairman of Z/Yen, added: “The core of the GGFI is a perception survey which observes and promotes change where it matters most – in people’s minds. The more we can get people talking about a sustainable transition, the quicker it will happen. The high level of interest in GGFI 1 is a step in that direction.”
London’s property market is now worth more than £1.5tn, an increase of 1.54pc in the past 12 months, according to fresh figures released on Thursday. Despite subdued house price growth in the capital over the past year, the market is more than twice as valuable as the combined worth of property assets in the next nine largest cities and towns in the UK: Birmingham, Manchester, Leeds, Bristol, Reading, Edinburgh, Nottingham, Sheffield and Glasgow.
Property portal Zoopla, which produced the figures by combining the value of all residential property in Britain’s top 10 largest cities, found that Bristol ranks as the second most valuable property market with a total value of £115bn, the only UK city, aside from London, to surpass the £100bn mark.
Glasgow, which has witnessed one of the largest growth rates of all UK cities in the past year, follows in third place with a property market value of £90.75bn, significantly higher than the total value of Scotland’s capital Edinburgh, which comes sixth on the list with a total house market value of £68.27bn.
Within each city, Zoopla found that highly affluent neighbourhoods contribute significantly more than any other to the city’s total property wealth. In the capital, property in SW1 – which covers Belgravia, Pimlico and Westminster – holds a total value of £54.57bn, which is almost as much as the entire city of Sheffield (£55.67bn).
Meanwhile, Bristol’s upmarket BS16 neighbourhood – which encompasses Downend, Emersons Green, Fishponds, Frenchay and Staple Hill – tops the list as the city’s most expensive enclave with a total value of £10.1bn.
Birmingham’s B13 (covering Moseley and Billesley) the city’s most valuable area with a total value of £3.97bn, while M20 (covering Didsbury and Withington) takes the top spot for Manchester at £6.48bn.
Zoopla’s Lawrence Hall said: “It comes as no surprise that London is significantly more valuable as a residential property market than any other British city.
“However, the data does show that, in comparison to cities further north and across the Scottish border, the rate of growth in London has slowed. The capital may be worth almost 10 times more than Sheffield, but Britain’s Steel City wins in the growth rate stakes.”
Sheffield’s property market has recorded the highest growth rate (5.63pc) of any British city, followed by Glasgow (5.38pc) and Manchester (4.49pc), Zoopla found. Reading follows London as the second slowest city for property value growth with just a 2.37pc increase over the past 12 months.
Recent data from HM Land Registry and the Office for National Statistics shows that the London market shrugged off a sluggish few months at the end of 2017, with prices rising by £4,000 in December compared with a drop of £6,000 the previous month.
Nevertheless, property experts predict that overall growth in the UK property market will remain flat this year. Capital Economics has forecast that house prices will grow by 2pc in 2018, while JLL predicted that the average property across the country would rise in value by just 1pc.
The Royal Institution of Chartered Surveyors’ chief economist said the “lack of inventory on agents’ books” was continuing to prove “a major challenge”, adding that the number of valuations being undertaken was “not suggestive of a pick-up in new supply anytime soon”.
More first-time buyers took out mortgages in 2017 than in any year since the financial crisis. There were 365,000 first-time buyers in the UK, the highest number since 2006 and an increase of 7.4% compared with 2016, UK Finance said.
Yet this growth is expected to cool in 2018, the lenders’ trade body said. The buy-to-let market was also “less buoyant”, it said. Separate official data shows UK house prices rose by 5.2% in 2017.
The figures, from the Office for National Statistics (ONS), showed that the 4.8% rise in the price of properties bought by first-time buyers was a slower rise than elsewhere in the market.
The average first-time buyer taking out a mortgage was aged 30 and had an annual household income – either one individual or jointly as a couple – of £41,000, UK Finance said, “Although the [mortgage] market remains competitive [for first-time buyers], there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year,” said Paul Smee, head of mortgages at UK Finance.
The figures show that the average home mover was aged 39 and had an annual income of £55,000. However, the numbers of those moving dropped by 3% in 2017 compared with the previous year.
The number of new buy-to-let mortgages dropped by 17% year-on-year, while the number of landlords remortgaging was down by nearly 12%. Landlords have faced more stringent tax demands.
The average home in the UK costs £226,756, according to the ONS. This value rose faster than prices in general, as measured by inflation, in 2017.
Accountancy firm PwC said that the figures showed UK house prices had increased by 22% more than earnings between 2012 and 2017.
“This shows that house price growth has outpaced average earnings growth for the fifth consecutive year, further ratcheting up the affordability challenge,” said Richard Snook, senior economist at PwC.
However, the picture is very mixed across the country.
London, where the average property still costs significantly more than elsewhere, at £484,173, saw the slowest annual house price growth of 2.5%, according to the ONS. This slowdown was showing some signs of shifting to the South East commuter belt, where house prices dropped by 0.5% in December compared with November.
Scotland saw the fastest year-on-year rise in prices, up 7.7%, taking the average house price to £149,000.
Another set of ONS data shows that rent paid by tenants in Britain to private landlords rose by 1.1% in the year to January 2018, down from a 1.2% annual rise the previous month.
According to Savills’ 2016 research – more than half of the money put towards a deposit for first-time buyers during 2016 was provided by the government’s Help to Buy scheme or the bank of Mum and Dad. New research reveals, that in 2016, 51 per cent of the £10billion put towards down payments on ‘starter homes’ was sourced by these two crucial sources of support to young buyers.
The vast majority of financial help came from parents: across the UK, 150,000 first-time buyers received parental help to raise the deposit they needed to get a mortgage, with the overall value of this assistance worth £3.45 billion. This is two and a half times higher than the amount provided by parents 10 years ago, and, according to Savills, the model looks set to continue.
So, why are first-time buyers alternatively sourcing deposits?
Rising house prices – Well firstly, property prices in the capital have risen by 78% over the past decade – an increase that has most benefited those at the top of the housing ladder.
With house prices high and wages stagnant – figures from the Office for National Statistics show wages in London have fallen in real terms since 2007 — the impact on housing affordability for first-time buyers has been huge!
As many parents are still living in the family home, while their own children are unable to afford a home of their own, many are choosing to release equity by downsizing to a more practical property in order to help their offspring on to the housing ladder.
Tighter lending criteria – While house prices have been rising, tighter restrictions on how much banks are willing to lend have also come into force. Savills data shows that the percentage of lending at over 90% loan-to-value has dropped significantly in the past 10 years, from 14.2% in 2007 to just 3.9% in 2017.
The FCA (Financial Conduct Authority) has also introduced stricter mortgage lending regulations across the market to ensure buyers will still afford repayments in the event of an interest rate hike. Thus meaning first-time buyers must raise ever bigger deposits in order to plug the gap between London house prices and average income.
Soaring deposits – The average first-time buyer deposit in London rose from £23,600 in 2007 to £100,400 this year, an eye-watering increase of 325 per cent in 10 years. By comparison, the income of the average first-time buyer has gone up just 27 per cent in that time, to £66,900.
The number of apartments being purchased in London has decreased as they are priced further out of reach for ordinary first-time buyers, new research suggests – On average, London apartments are now worth £434,587.
As of July, the number of flats purchased in the capital fell by 47% compared to 12 months prior, according to figures from Home.co.uk, whom analysed data from the Office for National Statistics. This comes amid a general slowdown in the level of transactions across the UK, and particularly in London. It found that the number of detached properties sold in the capital fell 5% in 12 months to July (2017), with sales of terraced houses down 8%.
The average price of a flat in London increased by 3.9% in the 12 months to July to £434,587, according to the Land Registry. Across the country, the price growth of flats is outstripping all other property types, partly due to a lack of supply, being led by the rises in the capital. This slowdown in sales signals that affordability has been crunched and many first-time buyers, who would typically purchase these properties, are sitting on their hands and waiting for a correction in prices.
While the Government’s Help to Buy scheme has allowed many first-time buyers across the country to get on the property ladder with a 5% deposit, the take-up in London has been far lower. The threshold of £600,000 means that many new build properties are too expensive to qualify, and analysis by the BBC earlier in the year found that while Help to Buy is used to buy one in three new-build homes outside London, in the capital it is just one in 10.
Other natural buyers of these properties, buy-to-let landlords, have also been squeezed by changes to the tax regime and many are sitting out buying opportunities or selling up their portfolios.
One of the UK’s wealthiest homeowners has just seen an eye-watering £13m fallen off the value of their property, all within a year! With Brexit uncertainty and recent tax changes shows vast fall in the value of homes – property rich list, no more.
According to Zoopla’s new research, Kensington Palace Gardens in west London tops the list of the most expensive streets in Britain, with an average property value of £35.7m – although that is £2.5m less than this time last year when the figure was £38.3m. In 2015 a typical property on the street was worth £42.6m – which reflects a near-£7m decline in just over two years.
However, the ultra-wealthy owners of homes in the Boltons, two miles south, have had a much tougher time… Zoopla stated the average value of a property on the street in South Kensington had plummeted from £33.3m this time last year to just under £20m now.
Other roads in the area, such as Manresa Road in Chelsea, had smaller falls, and a few increased in value over the year.
Other surveys have also reported sharp falls in some of the capital’s most expensive boroughs. Last month the property site Rightmove said the average asking price of a newly marketed home in Kensington and Chelsea fell by £308,000 between August and September.
Rightmove described the slump in the high-end central London market as a “readjustment”, and quoted an estate agent saying that, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty over how Brexit would pan out, “investors have been standing on the sidelines.”
Zoopla stated there were now 14,417 streets in Britain where the average property value is £1m or more – up from 12,418 in 2016. Of those, 5,899 are in Greater London. The Yorkshire and the Humber region has 77 £1m streets, north-east England has 45 and Wales has 11.
In line with this trend, 19 of the 20 towns with the highest number of £1m-plus streets are in southern England. Guildford in Surrey takes the top spot with 204, with Reading in Berkshire in second place with 187.
A fresh look and a market leading bespoke new app for Jumbo Bridging! The UK’s leading provider of all large bridging finance specialists, has undergone a total rebrand, and today has revealed its brand new bespoke website and mobile app to support its evolution in the growing bridging finance market, and with the highly anticipated launch of its new fund vehicle Force 12 Capital.
The Dubai and London based bridging finance company’s new website (www.jumbo-bf.co.uk) still retains its core values, but at the same time develops a fresh modern identity online. The new look and new mobile app offers Jumbo Bridging’s current and prospective clients further creative solutions when applying for their services and keeps Jumbo firmly ahead of the market with its ability to retain and attract new clients into the business.
The ‘Jumbo Bridging’ app allows you to communicate directly with other investors, brokers and introducers – anywhere in the world! Applying for a bridging loan with Jumbo Bridging now couldn’t be easier and more accessible to users, with thanks to the innovative features of the bespoke new app.
The social networking feature allows you to connect with all financial lenders and investors alike through your own profile. It gives users the chance to build, enhance and strengthen its users’ relationships within the finance industry.
It also includes these sleek benefits:
Daily financial industry news
A loan calculator which provides interest rates
An upload tool that allows valuation reports, photos and essential documents to be sent to an underwriter, at the click of a button.
An easy-to-use online application form
And much much more!
Christopher Dailly, CEO said: “It has been an exciting few years for Jumbo since our relocation to Dubai to better access the capital markets of the Middle East and having already secured a £100m + revolving credit facility for high-risk bridging loans we feel with the launch of our new fund Force 12 Capital as the primary funding vehicle of Jumbo Bridging it was a good time to do a re-brand of the business to better reflect where we are headed for the next few years. Our rebrand and App launch further exemplifies our continued growth as a company and cements our business as a brand in the rapidly changing finance industry as we recognise the need for change and to be continuously evolving.”