UK residential property prices increase for fifth consecutive month

Developers given planning permissions extension

The LDA ditches East London development project

Small businesses fear rate rises

Prime central London residential prices increase again

Nationwide Building Society has released figures which show that residential property prices have increased for a fifth consecutive month to September, with values at comparable levels to 12 months ago.

With the +0.9% increase in September, property prices have now risen by +3.8% over the last three months, and are +4.1% higher than at the start of the year, making it the first month since March 2008 in which house price inflation has not been negative. However they are still -13.5% below their peak of October 2007.

Martin Gahbauer, Nationwide's chief economist, said: “Given that the housing market still faces considerable headwinds in the form of high unemployment, restrictive credit conditions and an impending withdrawal of the stamp duty holiday, it would be surprising to see house prices continuing to increase at the very strong rate seen in recent months’

All house price information is derived using Nationwide’s mortgage data.

Developers given planning permissions extension

The UK Government has implemented a recommendation by the British Property Federation (BPF) to allow developers with planning permissions granted up until 30 th September to extend their permissions to give them more time to weather the economic downturn.

Initially the Government’s proposals had been restricted only to applications for ‘major’ developments which had not yet started, however ‘minor’ applications are also extendable after the BPF successfully intervened.

Liz Peace, BPF’s chief executive, said : "We are very pleased the Government has listened to our arguments and has made the measure available to all developments, regardless of their size. The property industry needs all the help it can get to beat the recession and get development moving again."

As a result this will decrease the often lengthy and expensive process that was previously in place for extending planning permissions and will enable the development and regeneration projects to continue with minimal delay once the simpler applications have been made. Although forms will still have to be filled out, they are simplified versions and no plans or drawings will have to be provided so this will cut costs even further.

The LDA ditches East London development project

The London Development Agency (LDA) has pulled the plug on a £1.5bn development project that was to be built on LDA land in East London in conjunction with developer Silvertown Quays Consortium.

However it served termination notices on the developer after the development of 5,000 homes, offices, shops and leisure facilities fell into difficulty due to the global financial crisis. The project was granted planning permission in April 2007 but with a plan that included partially financing it through forward sales of homes HBOS bank suspended its funding.

An LDA spokesman said: ‘With regret, after a prolonged period without progress, the LDA has decided to serve termination notices in respect of its arrangements with Silvertown Quays Limited. This decision reflects the Agency’s concern to ensure that this land is released for longer term planning of development at Silvertown Quays which is a key site for the overall regeneration of the Royal Docks’

Silvertown Quays appears hopeful that with a three-month period in which to respond to the LDA notice they can find a funding solution to continue the project.

Small businesses fear rate rises

A recent survey by the Forum of Private Business (FPB) revealed that its members are receiving access to a free business rates appraisal service amid fears that they would have to pay inflated rates bills for the next five years.

Business properties are revalued every five years to ensure that rateable values reflect the changes in the property market. According to FPB, the main reason behind these fears is that the present revaluation is based on rent prices from April 2008 when property prices were high and the recession had yet to hit. Small businesses believe that they will be facing unfairly high bills despite the recent slump in the market.

Its members’ concerns have come about after a Business Location Survey was carried out ahead of the revaluation of rateable values in October. The survey showed that 79% of respondents believe that their business rates will increase in April 2010, with an average expected rise of +3%. High Street businesses expect an increase of over +5%, whilst office-based businesses are looking at a rise in excess of +2%.

Matt Goodman, the FPB’s policy representative, said: “The 2010 revaluation, while not a revenue generating exercise, will affect most small businesses’ rate bills. Our survey shows that business rates are ranked as more of a concern than utilities and staff costs, and most of the businesses surveyed fear the worst – that their rates will go up”

However, help is at hand as, according to the Valuation Office Agency (VOA), ‘transitional relief’ will be available for those ratepayers facing the largest increase in bills and the revaluation will actually result in £5m less revenue for the Government and lower bills for many businesses.

The FPB in response has called for the transitional relief scheme to be extended to five years until 2014/15 with annual caps being applied to changes to any rates valuations over the period. With 61% of respondents also stating that the relief scheme should also apply to empty properties, following the removal of empty property rates relief in 2008.

Christine Cheesmur, FPB member, said: “Transitional relief is so important for firms facing an increase in their rates bills, particularly in the current economic climate. The Government should reinstate it in a way that genuinely helps businesses to control costs.”

Prime central London residential prices increase again

New research by Savills has revealed that residential properties prime central London have made an unexpected positive return in the past two quarters of 2009 after a first quarter fall of -4%.

Savills’ report showed that successive rises in the price of property occurred in the second and third quarter by +4.3% and +4% respectively. It has partly attributed this to a decrease in stock, with levels 20-30% below average and an increase in demand.

Significantly, for the first time since the last quarter of 2008, flats have outperformed houses increasing by +4.8% whereas houses have only gone up by +3%. In the core prime markets of Mayfair, Kensington, Chelsea and Belgravia values have improved by +6.1%, however this is some way off their peak, by 20.25%.

Yolande Barnes, head of Savills research department, said: “This growth is caused by very low levels of supply failing to meet an increased level of pent-up demand, predominantly from cash buyers or those with very high levels of equity to spend.”

Meanwhile, in south west London, the research showed that the market has recovered much quicker with values up +8.4% in the period from July to September, following on from an increase of +6.4% during the second quarter.

As the values in this part of London decreased more dramatically during the downturn than other prime markets, properties appeared to have provided better value with 85% of buyers being UK nationals purchasing for need rather than investment-related reasons.

Barnes continued: “We expect the south-west and central London markets to continue to perform differently to each other. Demand levels will probably prove more volatile in the central markets due to the discretionary nature of buyers.”

The report summarised that Savills expects values to plateau and possibly even decrease again as more stock comes on the market as potential sellers look to take advantage of the market at its highest peak for two years.

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