AHIPP declares HIPs will go ahead despite judicial proceedings
Amid news that the Royal Institute of Chartered Surveyors are commencing judicial review proceedings against the Communities and Local Government department regarding Home Information Packs, the Association of Home Information Pack Providers insist HIPs will go ahead.
As planned, HIPs will be launched on 1 June this year and AHIPP are quick to point out the benefits that will come with them. It is claimed that the introduction of HIPs will not only help to greatly improve the house buying and selling process, but will include an Energy Performance Certificate to improve energy efficiency in homes as well as reducing carbon emissions.
Mike Ockenden, director general of AHIPP, said: “It is difficult to understand why RICS has taken this step against HIPS when they are in the process of training both Home Inspectors and Domestic Energy Assessors and in addition, play a prominent role within the HIPs industry, as a certificate scheme.
“I would further question why they are now planning to spend their own member’s money on pursuing an avenue which appears to go against the interests of so many of their membership.
“However, those who have trained or are currently training to become Home Inspectors or DEAs should not be concerned, this latest move will not impact on their future training or their future career progression within the HIPs industry”, he concluded.
CML Scotland’s concern about Communities Scotland’s consultation paper
The single survey envisaged in the Communities Scotland consultation paper on the proposed reforms to the home buying and selling process in the residential market will not completely remove the need for mortgage lenders to conduct their own valuations to assess levels of lending risk, according to CML Scotland.
While many lenders will accept the valuation contained in the single survey, some cases will require lenders to conduct their own valuation, for example when the surveyor compiling the survey does not meet the criteria set by the lender. This point has previously been recognised by Communities Scotland but is not mentioned in the current consultation paper.
Kennedy Foster, CML Scotland, said: “We are disappointed that our concerns have not been addressed in the Communities Scotland consultation period. The introduction of the single survey is a massive change to the home buying and selling process in Scotland, and we believe more work is needed to ensure the new system is a success.
“It is also essential for Communities Scotland to ensure clarity in the business relationships between estate agents and surveyors. This will help give consumers and lenders confidence in the new system, and we are disappointed the consultation paper does not address this important concern.”
£686m sale and leaseback
Prestbury has unconditionally contracted to acquire a £686m freehold portfolio of 21 private hospitals from the UK from the consortium, Capio AB business. The properties will be leased back to the UK parent on new 30-year leases with annual fixed uplifts at an initial rent of £39.5m.
The consortium is made up of Apax Partners, Nordic Capital and Apax France.
Nick Leslau, chairman of Prestbury, said: “We are delighted to have been able to acquire an excellent portfolio of private hospitals with all the defensive qualities we look for in long term sale and leasebacks.
“We were happy to deal with the consortium on an exclusive basis and conclude this complex deal in two weeks from start to finish, thereby assisting the consortium in underwriting the larger deal. We have considerable appetite and resources to do much more in the sale and leaseback arena.”
Khawar Mann, director at Apax Partners, said: “Prestbury has been excellent to work with. They moved quickly and were real partners as we negotiated this complex transaction in a very short timeframe. The sale and leaseback of the UK hospitals was a key part of our strategy in acquiring Capio last year.”
21% of financial advisers’ business is buy-to-let mortgages
According to Paragon Mortgages, prime buy-to-let mortgages now make up 21% of financial advisers’ business, which is nearly double the 11% of the mortgage market that the Council of Mortgage Lenders’ 2006 figures showed.
Paragon Mortgages’ research shows that, despite two rate rises since the beginning of the year, Q1 2007 has seen continued growth in the buy-to-let market. Behind prime residential mortgages, prime buy-to-let is now the largest generator of business for intermediaries, making up a greater proportion of the market than all other niche sectors, even self-cert or sub prime residential.
“Buy-to-let is the biggest niche sector in the UK mortgage market, and our research shows that it is continuing to grow. As the sector expands, those financial advisors that have expertise in the area are, in turn, benefiting from its success”, said John Heron, managing director for Paragon Mortgages.
Increase house prices despite more availability
House prices increased in April despite a greater number of properties going on the market, according to reports from the Royal Institute of Chartered Surveyors.
RICS reports that 28.9% more chartered surveyors have cited an increase in house prices during the month, up from 26.9% in March. Property investors such as those with buy-to-let mortgages can subsequently expect higher prices when looking into new properties. This is in spite of a boost in supply ahead of the introduction of home information packs in June. It is thought that many sellers are looking to market their properties before they are required to meet HIPs regulations on 1 June.
“The fear of paying the upfront buying costs of Hips has pushed more property onto the market”, said Ian Perry, RICS spokesperson. “This will continue throughout May but conditions should tighten if HIPs goes ahead on 1 June as sellers withdraw from the market.”
Inflation slips as interest rates rise
Official data from The Office for National Statistics showed that inflation slowed in April from a record high as the cost of household bills fell sharply.
It said consumer prices rose 0.3% last month and 2.8% on the year. This was down from 3.1% in March, a level which had forced the central bank to write an unprecedented explanatory letter to the government. Analysts had predicted the latest easing and as such the figures are unlikely to settle the debate about whether interest rates need to rise again after the Bank of England hiked them to 5.5% last week.
Markets say there is a good chance of rates rising to 5.75% in the next few months, which would be the fifth increase since August last year.
The main reason for inflation slipping from its series high was a fall in gas and electricity bills as the major providers took on board lower global energy prices after last year’s oil spike.
However, there was less good news on inflation from food as the price of vegetables rose because of the change in recent weather patterns. The price of food and non-alcoholic beverages rose 6% on the year, which is the highest rate since June 2001. Retail price inflation, on which most pay deals are based, eased to 4.5% from a 16-year high of 4.8%
UK REITS give negative returns in 2007
According to the Wall Street Journal, UK Real Estate Investment Trusts, which were introduced in January, will give negative returns this year, causing analysts to call the end of the four-year boom in British commercial property.
The Bank of England’s ongoing interest rate policy is clearly having a deflationary impact upon UK commercial property. Traditionally, REITs trade at a premium to net asset value, reflecting the vehicle’s tax efficient structure. The UK is the only country where the REIT market is trading at a discount to the net value of the underlying property asset.
The UK stock market real estate sector’s high was registered in December, just prior to the introduction of REITs. If this negative price action continues, property funds may be put under pressure because of their innate illiquidity. If investors start redeeming, a situation may then develop forcing property funds to sell property in order to meet the needs of departing investors. Such selling may represent a real problem for investors. Credit contraction will then hit these types of investments hard.
Edinburgh’s largest re-generation project in last 50 years
A new £200m city centre neighbourhood transformation is deemed to be Edinburgh’s largest re-generation project in more than half a century by the City of Edinburgh Council.
The first development phase of the eight-acre site incorporates a public park, central courtyards and new tree-lined avenue s linking Fountainbridge and the West Approach Road was approved in May. The £200m project brings together Grosvenor, AMA and the Royal Bank of Scotland.
The former brewery site will now be known as Springside, and should provide 650 new homes and 160,000sq ft of high quality space for some 2,500 new jobs.
Dr Ali Afshar, director of AMA, said: “The springs beneath Fountainbridge, which still exist today, were a valuable resource for industry and embody our vision to create a distinct community with hundreds of new homes, stunning offices, shops and other local facilities in Fountainbridge.”
The redevelopment of the brewery site follows the masterplan approved by the City of Edinburgh Council in January 2006, and reflects guidelines set out by the Council’s own development brief for the area.
Residential market finally levels…but not for long
Figures released by The National Association of Estate Agents from its March housing market survey have revealed a levelling of activity in the residential housing market.
The number of houses for sale in March increased by 8.7% from figures reported in February. March is traditionally a busier time in estate agency than February and the March figures reflect this. NAEA members across the country reported an average of 62 properties for sale in March, relatively level to the 61 recorded in March 2006. With the forthcoming Home Information Packs it is likely that those wishing to sell will accelerate their decision and put their homes on the market before 1 June.
The number of people looking to buy property increased in March by 11.6% from February and by 3.7% from the same period last year. Demand continues to outstrip supply in the residential housing market throughout many parts of the UK, which in turn will continue to add an upward pressure on house prices. First time buyers are also up from 8.9% in March 2006 to 12.6% in March 2007, and it has increased slightly by 9.3% from February 2007.
Charles Smailes, NAEA president, said: “It appears that we are finally hitting a period of levelling in the residential housing market, although this is unlikely to last. There is a great deal of uncertainty in the market at the moment, the increase in interest rates and the implementation of home information packs are set to have a significant impact.
“Post 1 June, I expect new instructions to fall significantly as home sellers will have their right to speculatively test the market for free taken away from them. This will have a further impact on the already low levels of housing stock across many parts of the country”, he concluded.
Efficiency needs to improve in the housing market
New research by conveyance company, LMS, shows that in the first three months of 2007 efficiency in the housing market was at an all-time low.
In January and February, the average time between the notification of a sale and exchange of contracts was 57 days. This is an increase of 5.5 days on the previous quarter when it averaged 51.5 days. In addition, LMS’ cancellation figures also show a 2% increase from 12% of agreed sales cancelled in December 2006 to 14% in January 2007.
Dominic Toller, director of marketing and new business for LMS, says: “Our research shows a worrying picture of extra days being added into the transaction process. It may be that an increase in transactions, with people trying to sell before the 1 June HIPs deadline, has swamped the market. Nonetheless, the last time efficiency was even close to this level was in September 2004 when it peaked at 55 days.”
“Essentially now is the time for HIPs to prove themselves. In a market like this, where efficiency has nose-dived, HIPs have never been needed as much; the way is now clear for them to reduce cancellations and improve the process of buying and selling a property.”
Regenerating former limestone quarry in Northamptonshire
Developer Making Places has acquired a new brownfield site in Corby, Northamptonshire, to build 250 new homes alongside local facilities on the former limestone quarry Oakley Vale.
The £20m project is due to start in June 2007 and be completed in spring 2010. Making Places is a joint venture between developer Places for People and regeneration company Cofton.
The partnership will invest £300m in land acquisition over the next two years and plans to develop thousands of energy efficient homes in sustainable communities.
David Shaw, director at Making Places, said: “These plans represent a golden opportunity to continue redeveloping the Oakley Vale area of Corby, creating a prosperous and sustainable neighbourhood with a mix of homes for local people.”
Property First looking for investors
Property First Asset Management has acquired a 2.3 acre site at Liverpool International Business Park for a mixed-use development, and is currently looking for investors.
A 76,000sq ft office development valued at £12m is to be undertaken and will become the headquarters for Property First management team.
Matt Staines, business development manager for Property First, said: “All our property investments are pre-approved for SIPP, SASS and private equity investors. Our role is to de-mystify the process and ensure that investors have a single point of contact throughout. The majority of our investors have been initially attracted by the tax-free
element, but there are many more benefits to the investor from our approach.”
The company's aim is to have £1billion's worth of property assets under management within five years.
