According to Paragon’s latest buy-to-let index, total UK returns stood at 11.6% in July 2007; their highest level since April 2007.
Regions achieving the highest total returns are Yorkshire (22.1%), Greater London (20.3%), and the South West (19.1%).
In addition, rental incomes have risen 5% over the last 12 months from £10,392 to £10,914, and 3% over the last three months. Regions with the highest rental incomes per annum are London (£21,696), the South West (£12,545) and the South East (£10,814). Regions achieving the fastest growth in rental incomes over the last three months are London (17.1%), Yorkshire (16%) and the North (12.5%).
Yields also remained broadly stable, at or above the 6% mark for over a year. Regions achieving the best yields are the North West, Yorkshire, East Midlands and West Midlands - all at 6.5%. Across the board, terraced houses prove to bring in higher yields at 6.5% than other types of property. Semi-detached homes generate average yields of 6.3%, and detached houses and flats have below average yields of 5.9% and 5.4% respectively.
House prices suffer its lowest rate of growth in over 12 months
Land Registry’s monthly House Price Index for July showed that house prices in England and Wales increased by 0.1% in July, which is the lowest rate of growth since June 2006. This raises the average house price to £181,460.
London continues to lead the rest of the country in terms of house price growth with an increase of 1% per month, taking the average London house price to £342,936 in July.
The annual change in house prices is 8.8% for England and Wales. In London, the figure is 15.5% showing that for the fourth month in a row the rate of increase for London house prices is approximately 6% greater than that of England and Wales as a whole.
Additional funding for floods recovery
John Healey, floods recovery minister, has allocated funding to 39 local authorities who were worse affected by the July floods.
Around £1.2m is being released to authorities, on top of the £6.2m recently distributed to 36 local authorities. Local authorities will decide how best to spend the money allocated to help those people in the greatest need.
The funding has been allocated to support councils and communities based on the relative number of households affected. In total, around £17.5m of funding has been released to help vulnerable households following this summer’s floods.
Healey said: “Over the last few weeks we have worked closely with local authorities to get a clear assessment of damage to ensure we could target support to areas most in need. I know this money will make a difference to communities as will the other financial support we have announced including funding for schools and transport, as well as extra support through the special Bellwin scheme (a discretionary scheme which gives special financial assistance to local authorities in time of need) and help for businesses.”
Interest rates rises affecting the housing market
According to the National Association of Estate Agents’ (NAEA) latest survey, 71% of its agents reported that interest rate rises have had a negative effect on the housing market in their area. Around 6% believed it to have been a positive move and the remaining 23% considered them to have had little effect.
It also revealed that 61% of its agents had experienced a sharp drop in the number of house hunters on their books following the latest rise. Of this figure, 48% saw them decline by 5-10%, followed by 14% of agents who had seen a reduction of 11-15% and finally 13% of agents saw a 16+% decrease in new applicants registered. The remaining 25% experienced a drop of 4% or more.
Stewart Lilly, NAEA president, said: “There is a glimmer of hope that further interest rate rises are temporarily on hold following the latest round of reports. If this is indeed the case it will provide some much needed comfort to house hunters.
“The increases have already had a tightening effect on the housing market, however the Bank of England has suggested that there will need to be a further rate rise to at least 6% before we reach the peak of the cycle.”
Conditions of HMO licensing will be monitored
Landlords have been advised by the Local Authorities Coordinators of Regulatory Services (LACORS) that applying for a multiple occupation licence (HMO) will not free them from maintaining the standards of the property in the long term.
LACORS says that local authorities will ensure that the conditions of the licence are monitored. Around 86% of councils are already working to identify those landlords with buy-to-let mortgages who are not complying with the scheme.
Emma Van Field, LACORS spokesperson, said: “The overall aim of HMO licensing is to improve property conditions and also management standards. In order to get licensed the landlord has to satisfy the local authority that he is a fit and proper person to manage the property.
“There are licence conditions that landlords have to conform to. At the moment, most local authorities are just dealing with initial applications but the licence conditions will be monitored.”
CML says gross mortgage lending reached a new high for month of July
According to the Council of Mortgage Lenders (CML), gross mortgage lending reached a new record for the month of July totalling £34.4bn.
Although this is down by 1% on the £34.9bn of lending achieved in June 2007, it is 13% higher than the £30.6bn lent in the same month last year. CML believes mortgage lending remains robust despite the five interest rate rises since last August, although it has yet to see the full impact of higher rates. Lending is currently being fuelled by a large number of people re-mortgaging to better deals in case rates increase.
CML believes the cumulative effects of these rate rises will become more pronounced, and we expect this to feed through to lower levels of mortgage lending as the year progresses. CML is keen to point out that it is still on target to reach a record £360bn of mortgage lending this year.
Majority of landlords need to sign up to tenancy deposit scheme
According to the National Landlords Association (NLA), a large majority of landlords have yet to register with a government approved tenancy deposit scheme.
It is estimated that around 150,000 landlords have made the move to register with a scheme. Tenancy deposit protection, which has been in place for almost five months, applies to deposits taken under Assured Shorthold Tenancy agreements (ASTs) in England and Wales.
The NLA believes that some landlords previously using ASTs could now be choosing to use alternate tenancy agreements such as assured tenancies, in a move to avoid deposit protection.
David Salusbury, chairman of the NLA, said: “This could prove to be a risky strategy for landlords. Assured tenancies make it very difficult for landlords needing to recover possession of their property. For most landlords, avoiding the requirement to protect a deposit at the expense of compromising their ability to get the property back makes little business sense.”
Number of mortgages granted in July higher than expected
The number of mortgages granted for house purchases in July 2007 stood at 115,000, says the Bank of England’s latest figures.
The figures are higher than the forecasted 110,000 approvals predicted by economists in a Bloomberg poll. The Bank of England also revised its June figure from 114,000 to 115,000 in a further sign that higher interest rates have not yet deterred borrowers from taking out new deals.
Olivier Gilmartin of the Royal Institute of Chartered Surveyors said: “Today’s stronger mortgage lending data will add weight to those on the monetary policy committee who believe that another interest rate rise may be necessary before the end of the year. However, volatility in credit and financial markets will remain the key determinant for the rate setting committee going into the winter period.”
The property industry welcomes IPC proposals
A group of business companies, including the British Property Federation (BPF) and the Royal Institute of Chartered Surveyors (RICS) has welcomed the Government’s proposed Infrastructure Planning Commission (IPC), but has warned it must be given the resources it needs to do the job properly.
The group has written to planning minister Yvette Cooper offering their support for the Government’s IPC proposals, outlined in the Planning White Paper. The Government intends to specify what transport, energy and waste infrastructure is needed and where, as agreed in National Policy Statements formally set out by Parliament.
The new commission, an independent body accountable to the Government, is being created to fast-track the planning process for these nationally important infrastructure projects.
Weymouth development waits for bids
A development in Weymouth that could see around £6m of property development finance being pumped into the town is now awaiting bids to assist with the initiative, it has been advised.
The scheme, designed to be finished in time to host the sailing for the 2012 London Olympics, has already received the support of most of the local residents who have replied to a consultation.
Council officials have urged bidders to come forward so that the September deadline is not missed, and the project not delayed by several months as a result.
“There will be significant benefits in improving the physical appearance and character of Weymouth’s seafront derived from these proposals”, said Colin Ellis, conservation officer.
Seaside towns exhibit considerably higher price growth than other areas of the country, according to a Halifax report published earlier this month, with Brighton currently the UK's most popular buy to let location.
