LSH warns business leaders and developers throughout Yorkshire
Lambert Smith Hampton has issued a warning to business leaders and developers throughout Yorkshire following Gordon Brown's move to slash the business rate relief on vacant industrial and commercial properties to a maximum of six months.
Citing the Barker and Lyons Reports, the Chancellor described the reduction as an attempt to “encourage better use of commercial premises”.
Traditionally, industrial units have enjoyed greater rate relief compared to all other types of commercial property which are only exempt from paying rates for three months upon vacating the property.
Richard Wackett, director of rating department for LSH, warns that Brown’s budget has important repercussions across the commercial property industry, but particularly for developers: “The cut in rate relief will affect speculative developers the hardest; those people who have traditionally enjoyed a sizeable leeway between completion and occupancy.
“Developers will now have to be more efficient in the way they market their properties. They will have to focus on finding tenants as close to completion as possible and be diligent about it or risk footing the bill. Developers will need to be far more proficient at challenging their new rating assessments or completion notices when they are served by local authorities.”
Increased demand for Bristol and Leeds says Propertyfinder
According to Propertyfinder.com, Bristol and Leeds are becoming the new UK property hotspots.
Research from Propertyfinder.com found that while London remained the most popular place in Britain to invest in property, Leeds, Bristol, Cardiff and Birmingham made up the top five.
Warren Bright, chief executive of Propertyfinder.com, said that while Manchester had not appeared in the top five, the firm was aware that the city had been experiencing “serious development over the past five years”, which had been “attracting buyers in droves”.
Bright said: “All these cities have experienced serious regeneration and development in recent years, and are now starting to reap the benefits, attracting home buyers who want to invest in a city lifestyle without the sky-high London prices.”
Rental values in prime London set to soar
Growth residential rental values in prime central London is forecast to increase by a further 10% this year (after rising 10% in three months from February 2007), according to Savills.
With a limited amount of freehold supply and continued associated strong capital growth forecast, more demand is expected to overflow into the rented sector.
“We see this year as a turning point for residential rents in prime central London and expect to see a significant upward spike by the year end”, said Lucian Cook, director of Savills Research. “At the very top end of this sector, where rents average more than £1,500 per week, we anticipate annual growth of at least 12%.
“The continued expansion of London as a major financial centre and the associated growth in employment figures in the city are strong drivers for growth. There is an increasing demand from young, well-paid executives for whom renting is a viable alternative to purchase.”
Rent rises will continue suggest ARLA
A report from ARLA (Association of Residential Letting Agents) states that the last quarter of 2006 saw the UK residential letting market remain relatively strong.
Rent rises have been consistent across the last quarter, with an average of 1.5% per month - this is more than the 0.72% increase seen during the same period for the previous year. Concerns seem now to centre on whether landlords of buy-to-let property are going to ‘cash-in’ on their investments due to the increasing running costs and reduce the number of quality rental property on the market.
UK house price growth slowing down
Halifax mortgage bank said house prices in the UK rose by 1% in March and by 2.8% in the first quarter of the year compared with 4.2% in the last three months of 2006.
Halifax believes the trend of rising prices should settle in the coming months as recent house buying conditions have become more subdued.
Halifax group economist Tim Crawford said: “The house price rise in March was the second-smallest monthly increase in prices since last August. Prices continue to rise in a tight market but there are emerging signs that pressure on householders’ finances, partly due to the rise in interest rates since last summer, are dampening housing demand, with evidence of reduced market activity.”
Average Scottish house price up 15.2% in past year
House prices in Scotland have gone up by 15.2% in the past 12 months, compared with 9.5% for the UK, according to the latest figures from Nationwide Building Society.
Scottish house prices jumped by 2.7% in the first quarter of this year. The average house price in Scotland is now £140,929, although this remains below the UK level of £175,554.
Edinburgh remains the most expensive part of Scotland, with an average price of £234,919. This is followed by Aberdeen, where it now costs £197,958 to buy a house.
Activity in the construction sector hit a three year high
Activity in the construction sector hit a three year high in March, with the overall construction index (PMI) rising to 58.9, up from 57.3 in February. This is the highest reading since December 2003.
Capital Economics believes that the index suggests that still-solid activity levels in the wider economy continue to provide support for the construction sector.
“At the sector level, the data reveals that a sharp rise in activity in the housing sector was responsible for the latest rise in aggregate construction activity”, said Ed Stansfield, property economist for Capital Economics. “Housing activity rose from 53.3 in February to 56.1 in March, more or less reversing the falls seen in the previous two months.”
Activity levels in both the commercial construction sector and the civil engineering sector were broadly unchanged from February’s level. “Historically, activity levels in the commercial construction sector have provided a reasonable cross check on the plausibility of all-property rental growth forecasts up to six months ahead”, said Stansfield. “The latest data continues to suggest that our end-year forecasts for rental growth of around 4% remain on track.”
Enhanced protection for tenants under new law
Tenants who pay a deposit to a landlord will now have enhanced protection under the new Tenancy Deposit Protection Scheme.
Part six of the Housing Act 2004 states that landlords and agents will, by law, have to sign up to one of three schemes including The Deposit Protection Service, Tenancy Deposit Solutions and The Tenancy Deposit Scheme.
The changes should improve tenants’ rights and ensure that their deposits are not unfairly withheld. When the landlord and tenant agree how it should be returned, it must be paid back within ten days.
Ruth Kelly of the government said: “With the average deposit coming in at around £700, we are talking about significant amounts of money. People hand over deposits in good faith and rely on getting their money back in order to move on to their next property. It is not right that under the current system lack of protections and lengthy, costly arbitration procedures mean that thousands of tenants end up waving goodbye to their cash. The changes we have made will put an end to this.”
£1.2bn redevelopment partnership between Leeds and Bellway Homes
Leeds City Council has entered into a partnership with Bellway Homes which will see the development of new homes and community buildings over a two-decade period.
Around £1.2 billion worth of Property Development Finance will be set aside to deliver the East and South East Leeds scheme. It will include the construction of 5,000 new homes, neighbourhood centres, local schools and health provision centres, covering a total of 1,700 hectares.
John Watson, chief executive of Bellway, said: “EASEL is a blueprint for large-scale housing replacement programmes which are needed across the UK, and where private finance can be captured to help pump prime regeneration.”
Record monthly price growth in prime Central London
Prime property prices increased by 3.1% in the month of March, the highest monthly rate of growth on record, leading to an annual price growth of 32%.
Property prices in the capital have been increasing for 27 consecutive months with the last price fall recorded in December 2004. Chelsea and St John’s Wood continue to be among the best performing areas in prime central London, according to Knight Frank.
The price of houses in prime central London has increased by 10.2% in the first three months of the year while flats increased by 7.5% in the same time period. Property prices continue to be driven by supply shortages and international demand.
In March, the supply of newly available property fell by 27% compared to the total for February while the number of prospective purchasers increased by 16%, fuelling the price rise in the market.
Knight Frank’s head of residential research, Liam Bailey said: “In general, houses have outperformed flats, mainly due to supply shortages. In the past month houses have increased in price by 3.9% while flats grew by 2.2%.”
Landlords are increasing their buy-to-let portfolios
The average landlord’s portfolio now features 11.1 properties - up from 10.2 in November last year.
Figures released by financial services firm Paragon also highlight that average portfolio values have risen by 7% between November 2006 and February 2007.
John Heron, managing director of Paragon Mortgages, said: “Landlords are able to extend their portfolios through good yields and rental incomes, generated by increased tenant demand.”
The number of properties owned by each landlord is predicted to rise further over the next 12 months, with those surveyed expecting an 8% increase across their portfolios.
Nearly 90% of first time buyers choose fixed rate mortgages
During February, a record 87% of first time buyers chose fixed-rate loans according to figures from the Council of Mortgage Lenders (CML). This is up from the previous record of 84% in January of this year.
February’s data shows that 70% of home movers chose fixed rate mortgages as well.
The CML also revealed that the number of first-time buyers entering the property market fell in February to the lowest level recorded for nearly two years.
In a further indication that recent interest rates rises are beginning to have some effect, CML figures for February show that the number of home loans taken out by first time buyers dropped to 25,600 from 26,400 the month before. The monthly total is down on the same period last year and is the lowest since March 2005.
Michael Coogan, director general of the CML said: “With the chance of at least one more interest rate rise this year, first-time buyers are taking the sensible option of taking out fixed-rate deals, and locking into the payment security they provide.”
