Money never sleeps

The luckiest generation: who really had it best when buying property?

2019-11-11T14:12:00.000+08:00

The luckiest generation: who really had it best when buying property?

The debate over whether it is harder for today’s young people than it was for their grandparents to get on the housing ladder has raged for years.

So-called millennials, and their younger “Generation Z” counterparts, point to hugely overpriced houses and eye-watering deposits as proof that the barriers to buying a property today are higher than ever. Older generations, commonly known as baby boomers, argue that borrowing has never been cheaper and their mortgages had interest rates in the double figures.

The avocado has become a symbol of the housing struggle as some say that young people could save up for a deposit if they just sacrificed the costly toast spread along with frequent foreign holidays.

Data from Savills, the estate agents, compiled for Telegraph Money, has shone a light on which generation has been the luckiest when it comes to property.

We compared four generations, splitting them roughly as baby boomers (born between 1946 and 1964), Generation X (born between 1965 and 1980), millennials (born between 1981 and 1996) and Generation Z (born after 1997).

Savills looked at numerous different measures, including house prices, deposit sizes and mortgage rates and compared the situation for someone buying in 1985, 1995, 2005 and 2015. Interestingly, the average age of a first-time buyer has not massively changed in that time at 28, 29, 31 and 30 respectively.

House prices

The amount the generations needed to pay to buy a house has grown massively since the Eighties. The boomers who were buying their first home in 1985 purchased for an average of £21,000 – or £62,505 in today’s prices.

By contrast, the average first home in 1995 was £40,000, had soared to £112,300 by 2005 and in 2015 the average first-time buyer was purchasing a property worth £156,100.

The boomers also benefited from the quickest growth in the value of their homes. Within three years the £21,000 homes had risen in value by 62pc while today's young buyers' homes had gained only 9pc in the three years to 2018.

Those in Generation X who bought in around 2005 were the hardest hit here – their homes actually lost 0.4pc of their value in the following three years, although this is a period that included the financial crisis.

The boomers again were the quickest to build up equity in their new homes, gaining £14,000, or 1,231pc in three years. The newest buyers have gained 51pc while those afflicted by the financial crash lost 4pc of the equity held in their homes.

Winner: baby boomers

Deposit sizes

Deposits are another area where boomers had an easier time. Not only was the average deposit paid by a first-time buyer in 1985 much lower than newer buyers at £1,100 but it also added up to just 11pc of the buyer’s salary.

By 2015, the average deposit needed was £26,600, a massive 68pc of the typical buyer’s salary. In London this rises even higher to £81,200 or an eye-wateringly high 131pc of salary. In 1995 the average deposit needed was £2,000 (12pc of salary) and in 2005 it was £11,300 (35pc of salary).

This has been driven by an increase in the amount of a property’s value required as a deposit. This was 5pc in 1985 and 1995 but rose to 10pc in 2005 and 17pc in 2015.

Lawrence Bowles, from Savills, said: “Deposit requirements have gone up very significantly in just a few years. Incomes have been rising too, but much slower than house price growth and the size of people's deposits has shot up much faster.”

Winner: baby boomers

Mortgage rates

One area where boomers do lose out is servicing the mortgage. Although getting on the ladder is much harder today, those who do manage it are faced with much lower costs to pay off their mortgage.

In 1995 the average rate on a two-year fixed mortgage, the type most likely to be taken out by a first-time buyer, was 8.07pc – more than four times the comparable rate in 2015 of 1.92pc.

What's more, data compiled for Telegraph Money last year by Savills showed that the amount of income spent on paying mortgage interest has decreased. In the mid-Seventies, buyers spent 13pc of their salary just paying the interest on their home loan. Twenty years later, this had increased to one fifth.

Now, however, rates are far more favourable and the amount of income spent on interest has fallen to 8pc.

The terms of taking out a mortgage have also improved as buyers are now able to pool together and have both their salaries taken into account when it comes to affordability – an option that has not always been available.

Mr Bowles also pointed out that in the past it was far more common to have an interest-only mortgage where the capital was not being paid off – thus lengthening the term. In 2007, 42pc of new mortgages were on an interest-only basis whereas today that figure is around 8pc.

Winner: millennials & Generation Z

The London premium

All of these factors are exacerbated by the property market in London – and this has always been the case.

Even in 1985, average deposits were around three times higher in the capital than outside it, at £3,200. Oddly this number fell slightly by 1995 but today it has soared to more than £80,000, still roughly three times the amount needed outside London.

As a percentage of income this was 23pc in 1985 and 131pc today.

Mr Bowles said: “In London, prices have shot up and stayed high. We think that’s the ‘bank of mum and dad’ effect, as that’s the only real way most people can get onto the property ladder."

And as for the avocados?

“Nobody is suggesting it’s ever been easy to buy a house," he added, "but no amount of baked beans on toast for dinner is going to get you to the £140,000 you need to buy a house in London.”

Resources: https://www.telegraph.co.uk/personal-banking/mortgages/luckiest-generation-really-had-best-buying-property/

Landlords' woes are just a blip here's why-to--let will rise again

2019-10-15T10:15:00.000+08:00

9 OCTOBER 2019 • 6:02AM

The past 11 years have been a challenge for landlords in anyone’s book. When you compare the post credit crunch market to the booming early and mid-2000s, the difference is stark.

Then, people were clamouring to jump on the buy-to-let bandwagon, house prices were rising, lending was flexible and government and regulatory intervention was infrequent to say the least.

Now, some landlords are leaving the sector, others are putting a halt on expansion, house prices are stuttering and the red tape just keeps on tightening, squeezing landlords’ profit a little further with each new measure.

It has certainly got tougher, following a swathe of new rules and regulations for landlords and lenders that, frankly, make investing in property to let less attractive. These include the withdrawal of tax relief on mortgage interest payments, minimum underwriting standards and the stamp duty surcharge, to name but three.

There’s no denying that landlords are having a harder time when compared to the recent past – but are we really seeing the slow demise of buy-to-let?

We can see more clearly what’s happening in the Private Rental Sector when we step back and look at the bigger picture. The period from the mid-Nineties until 2007 actually represented a boom for landlords rather than the long-term trend.

In fact, when we look further back – over 100 years – we find a cycle of downturns and booms, interspersed with government interventions. The Private Rental Sector grows and government steps in to protect tenants and restrict landlord profits. Eventually supply can’t fulfil demand and the Private Rental Sector rises again.

It’s a cycle that looks pretty similar to what we’re going through now.

Highs and lows: a short history of the rental sector

At the start of the 20th century, the Private Rental Sector was flourishing. Most Brits rented property and the majority of lets were private.

The following century saw repeated highs and lows for landlords, with two world wars contributing to a lack of supply in properties generally (house building was halted during The Great War and homes demolished by bombs in the Second World War).

This, in turn, meant letting property privately became more profitable and the Private Rental Sector grew, which was followed by government measures to give tenants greater rights, which curtailed that profitability.

From the Rent and Mortgage Interest Restriction Act of 1915, which capped rents, to the Protection from Eviction Act in 1977, as well as huge social house building programmes in both post-war periods, the Private Rental Sector shrank and expanded again more than once.

We also saw the introduction of low-interest mortgages in the Seventies, which supported homeownership, and Right to Buy in the Eighties, which decimated social housing stock and boosted homeownership to well over 60pc. By the Eighties, the Private Rental Sector had fallen to a low of just over 10pc of households.

The seeds of buy-to-let as we now know it were sown with the The Housing Act in 1988, which introduced the Assured Short hold Tenancy and removed rent caps, making it far easier for landlords to make a profit from renting property. Cut to the Nineties and the introduction of off-the-peg mortgage deals for landlords – and the buy-to-let boom began in earnest.

Then came the financial crisis, and the government interventions initiated by then-Chancellor George Osborne to make investing in property less attractive continue today.

But the fundamentals supporting the Private Rental Sector are evident, in population growth, owner-occupation rates and a chronic lack of social housing.

Why the future is looking up for landlords

The population of the UK is an estimated 66 million, according to the Office for National Statistics (ONS), and it’s expected to continue growing, reaching almost 73 million by 2041.

But Britain’s housing market is struggling and we are still not building homes fast enough to keep up with demand. Plus, house prices – at an average of £226,234, according to the ONS – are not affordable for many aspiring homeowners.

It’s no surprise that the number of households in the Private Rental Sector rose by 25pc between 2011 and 2018, to 4.5 million, according to the government’s English

Private Landlord Survey. This makes it the second largest tenure in England and home to a fifth of all households – 35pc of which are families with dependent children

Rental demand remains high, rents are higher still – up to £861 a month, according to Your Move – and buy-to-let mortgage rates are low

So, while continued challenges for landlords (and there are more to come) mean we are likely to see the buy-to-let market stagnate in the near future, the long-term demand for the sector is clear.

As history has shown us, the Private Rental Sector always bounces back.

Phil Rickards is head of BM Solutions, the buy-to-let arm of Lloyds Banking Group

Resources: https://www.telegraph.co.uk/property/buy-to-let/landlords-woes-just-blip-buy-to-let-will-rise/

Cash or mortgage: what's the best investment strategy for buy-to-let landlords?

2019-10-01T10:13:00.000+08:00

Cash or mortgage: what's the best investment strategy for buy-to-let landlords?

They say cash is king, but when it comes to investing in property, is it better to take a mortgage or to buy a home outright?

Those investing in property to fund their retirement or to generate additional income have seen their returns squeezed in recent times as favourable tax breaks have been withdrawn.

This has made it more appealing to buy properties outright, as mortgage costs can no longer be fully offset against a landlord’s tax bill, reducing their cost effectiveness.

However, analysis for Telegraph Money by Private Finance, a mortgage broker, found that landlords can still generate far higher returns by borrowing and spreading their cash over two or more properties, even when mortgage interest and other costs are considered.

This is despite the fact landlords also face additional management fees, insurance premiums and general upkeep costs for each extra property.

Private Finance looked at two scenarios where an example investor had £100,000 to invest.

Buying one house with cash

By buying a house of this value outright, the buyer would be able to generate a typical income of £500 per month in rent.

Once stamp duty, management fees, insurance costs and general upkeep are considered, the landlord should expect to bring in £380 per month, equivalent to £22,800 over a five-year investment period.

Buying two houses with mortgages

By spreading their cash, however, the same landlord could also purchase two £100,000 homes, one with a £50,000 mortgage and one with a £60,000 loan (to account for the extra £10,000 in stamp duty, legal costs and broker fees).

Private Finance said a typical landlord could take out a five-year fixed-rate loan with The Mortgage Works, part of Nationwide, at a rate of 2.59pc. Added to other costs, the landlord would have monthly outgoings of £477.

This would be covered by £1,000 in rent to leave a monthly profit of £523. Allowing for mortgage tax relief of 20pc, the landlord would expect to generate £570 in cash a month, equivalent to £34,200 over five years.

Which is better?

The landlord would generate an extra £11,400 by mortgaging two properties versus owning one outright. Having two properties also has the benefit of diversifying the portfolio, meaning that even if one home is empty the other will be generating rental income.

While landlords are facing historically low interest rates from mortgage lenders, if these costs rise investors will see their profits eaten away.

The landlord must also work out their own costs in terms of time spent maintaining two homes rather than one.

Chris Sykes, of Private Finance, said: “By taking advantage of the low interest rates currently being offered by the mortgage market, it’s possible for landlords to maximise the size of the cash flow their portfolios are able to generate.”

Mr Sykes said that the landlord would have higher insurance and upkeep costs if they had two properties. They would also be twice as exposed if house prices were to fall – but would benefit twice as fast if property prices increased.

He added: “There is also the tax relief gain on financed properties to consider. Although not as much as previously gained it is still a benefit.”

Resources: https://www.telegraph.co.uk/investing/buy-to-let/cash-mortgage-best-investment-strategy-buy-to-let-landlords/

The most affordable spots for first-time buyers in Britain’s booming cities

2019-08-26T11:38:00.000+08:00

The most affordable spots for first-time buyers in Britain’s booming cities

While young people in London are giving up hope of ever owning a home, in other regional cities many are already motoring up the property ladder.

These rival urban hubs have booming job markets, regeneration programmes in full swing and property prices that have not yet reached the eye-watering levels of the capital.

“Increasingly graduates are opting to remain in the city where they studied,” says Lawrence Bowles, a research analyst at Savills. “These places are all major hubs and young people are recognising that they can get the job they want and get on the housing ladder much quicker there than if they took up a position in the capital.”

Even in cities where house prices are unaffordable for most, such as Bristol and Cambridge, there are still neighbourhoods where housing is affordable, he adds.

Exclusive data compiled by Savills for Telegraph Property has pinpointed the exact areas within 22 of Britain's biggest cities (excluding London) where house prices are most in line with average salaries in the area. We've found the best of these places in each region. So no matter where you’re looking, follow our guide to where to buy a home with the lifestyle you're after, for a price you can afford.

South East

Park, Reading

Average price of a flat or terrace: £149,201

Comparing the price of an average flat or terrace to the median household incomes of 18 to 30-year-olds across the 22 cities, Savills found that the best place to be a first-time buyer in the South East is the ward of Park in Reading.

Here, young people have high average salaries of almost £50,000. With first-time buyer properties in the area costing around £150,000, you’ll have to pay just three times your earnings to get on the property ladder. For young people buying in London, properties can cost as much as 20 times their salary.

Those looking to the buzzing science hub of Cambridge will also be able to find pockets of affordability. Though the average home in the University City will set you back almost £440,000, a flat or terrace in Romsey, slightly to the east of the city centre, costs less than half that at £213,000. That is equivalent to 3.2 times the household income of 18 to 30-year olds in the area.

South West

Bedminster, Bristol

Average price of a flat or terrace: £155,589

Prices in Bristol have been sky-rocketing, mainly driven by millennials attracted by its coffee culture, craft beer and goody scenes. An average home in the city is now nearing £300,000.

But those looking in the ward of Bedminster, to the south of the river Avon, can still find a bargain. The average young person (with a healthy income of £46,500 a year) can pick up a starter home for just over 3.3 times their earnings, at around £156,000. The neighbourhood is known as being home to many of Bristol’s kookiest arts and music venues.

Buying in the most affordable wards within the South West cities of Exeter or Bath is slightly more difficult. In St Loyes, east Exeter, flats and terraces cost a similar amount to Bedminster (£156,000); however, as annual household incomes are for the same age group are £4,000 lower; it costs closer to four times your salary to buy in the area. In Odd Down in Bath, buyers must pay more than four times their salary for a starter home, costing on average £218,000.

North East

Castle, Newcastle-upon-Tyne

Average price of a flat or terrace: £111,863

Encompassing the leafy northern suburbs of the Toon, Castle is one of the best places to live to be within a short commute from this growing northern powerhouse, while avoiding the high prices now common in more central areas of the city. House prices in the North East are expected to jump by almost 18 per cent in the next five years, according to Savills. A flat or terrace in Castle currently costs a little under three times the £42,000 that local young people make each year.

North West

Boothstown and Ellenbrook, Salford

Average price of a flat or terrace: £107,096

Both Salford and Manchester have been boosted by millions being pumped into regeneration projects. As a result, house price growth has been outstripping the national average.

Yet two wards in particular still offer great value for young buyers wanting to enjoy the great local nightlife live near the burgeoning tech start-up scene.

In Boothstown and Ellenbrook in Salford, and Moston in north-east Manchester, starter homes cost just over two times average incomes of 18-to-30-year-olds in the area. Average household incomes in Salford for this age group are over £50,000 a year, more than double those in Moston.

Yorkshire and the Humber

Hunslet & Riverside, Leeds

Average price of a flat or terrace: £61,648

The city with the most affordable hotspot on the list was Leeds. While average prices across the city stand at £185,231, buyers in Hunslet & Riverside get a home for around a third of that. With salaries standing at around £41,000 in the area, young home purchasers pay just 1.5 times their income to live a 10-minute bus ride from Leeds’ city centre, with its quirky cafes and famous nightlife.

Copmanthorpe in York also offers good value for money. Here, starter homes cost around £107,000, around 2.3 times local household income for young people.

Midlands

Soho & Jewellery Quarter, Birmingham

Average price of a flat or terrace: £89,703

Blazing the way for house price growth in the centre of the country is Birmingham.

For around £90,000, first-time buyers can pick up a home in the city’s hip Jewellery Quarter, where old diamond dealers and Victorian workshops sit among new microbreweries and cocktail bars. That means they need to spend just under two times their salary to get on the ladder. Average prices across the city are around £100,000 more.

Savills expects prices in the West Midlands to soar in upcoming years too, forecast to rise by almost 20 per cent over the next five years. In Hartsholme in Lincoln (another popular Midlands city) young buyers can find homes for around 2.7 times their household income.

Scotland

Baillieston, Glasgow

Average price of a flat or terrace: £99,221

Of the two Scottish cities on Savills' list, Glasgow was the one with the most affordable ward. With property prices across the city having risen to £134,162, first-timers should look to Baillieston to buy a home.

A flat or terrace in this eastern suburb costs three times local incomes for 18-to-30-year-olds, which stand at around £33,000. Sitting seven miles from the city centre, a commute from Baillieston into Glasgow takes around 25 minutes.

Buying in the most affordable ward in Edinburgh, Drum Brae/Gyle, means having to spend almost five times your salary. That makes the city the least affordable on the list. Terraces and flats in Drum Brae/Gyle cost around £180,500.

Wales

Creigiau/St. Fagans, Cardiff

Average price of a flat or terrace: £117,439

For just over two times their annual income, young people in Cardiff can most easily get a foothold on the property ladder in the ward of Creigiau/St. Fagans.

Buying a starter home here costs around £90,000 less than the average house across the city, which is currently powering ahead of the rest of Britain for house price growth. Homes rose in value across Cardiff by around 6pc in 2018, three times more than the rest of England and Wales.

Sources: https://www.telegraph.co.uk/property/buy/affordable-spots-first-time-buyers-britains-booming-cities/

What will happen to house prices in a no-deal Brexit – and will it be a good time to buy?

2019-08-14T16:46:00.000+08:00

What will happen to house prices in a no-deal Brexit – and will it be a good time to buy?

Prolonged lower interest rates suggest...yes

It's the question on most house hunters' lips: what would a no-deal Brexit mean for the property market?

Prime Minister Boris Johnson has vowed to leave the EU "come what may" by October 31 – the date the UK must exit the EU whether a deal has been reached or not.

Bank of England governor Mark Carney has previously said that house prices could crash by a third if there is a no deal, while the Office for Budget Responsibility predicted that a no-deal Brexit would lead to house prices falling by almost 10pc by mid-2021.

While no one really knows what's in store for the housing market, some of the country's biggest estate agents have tried to predict where the UK's property market is headed, and whether now is the time to buy.

Should I buy property now or wait until after Brexit?

In many parts of Britain, particularly London and the South East, house price growth has slumped. The consensus among property experts is that political and economic uncertainty has resulted in prospective buyers sitting on their hands, while a chronic shortage of properties has stopped prices from falling very steeply.

There are signs that if you can buy now, you should – in order to save some money. While some purchasers are, understandably, reluctant to commit to buying until after the ramifications of Brexit become clearer, this is likely to cause pent up demand which could actually lead to house price growth towards the end of the year.

Mark Peck, of estate agent Cheffins, said that even with the recent talk of the increasing likelihood of a no-deal Brexit, "we are still seeing strong levels of demand for properties", which is helping to support property prices.

He added: "If there is a no-deal Brexit, interest rates and employment levels will be the real drivers of what happens with the housing market. If they aren’t adversely affected, we see the demand for houses remaining strong."

Nick Leeming, chairman at estate agent Jackson-Stops, said: "Once a firm decision has been made on when the UK will be leaving the EU, we expect to see an increase in listings and greater activity levels, with the prospect of a modest uplift in property prices in the new year.

"As stock continues to be limited, now represents as good a time as ever to sell a home," he added.

Howard Archer, chief economic advisor at EY Item Club, said a shortage of houses and the likelihood the Bank of England will keep interest rates close to ultra-low levels is continue to support prices, despite Brexit uncertainty

What's going to happen to house prices?

The Royal Institution of Chartered Surveyors (Rics) last year predicted that national house price growth would come to a "standstill" this year, with a supply shortage negating "outright falls".

House price growth this year has certainly slowed; the latest figures from Nationwide show that prices in the year to July rose just 0.3pc, with strong growth in Wales and the Midlands balanced out by falls in London and the South East.

Estate agency Savills has forecast that the UK will see zero average house price growth in 2019, undershooting the a previous prediction of 1.5pc growth based on an orderly Brexit in March.

Stephanie McMahon of agent Strutt & Parker offered a more positive outlook, with a best case forecast of 2pc growth , but with the risk that prices could slip by 5pc.

Both Savills and Strutt & Parker forecast stronger growth in the medium term. Lucian Cook, Savills' head of residential research, said: "Assuming a no-deal Brexit would result in interest rates staying lower for longer, mortgage affordability would be supported.

"Perversely, this could give a bit more capacity for house price growth over the medium term. The question is whether households feel confident enough about their future finances to unlock this potential."

Ms McMahon said: "We would expect a bounce back in 2020, however continued political and economic volatility could prolong the period of poor price growth and low transaction levels."

Will London fall harder than the rest of Britain?

The capital has been the biggest under-performer for property since the Brexit vote in 2016, with around £20,000 wiped off the value of an average London property in the past year alone, according to the Office for National Statistics.

Experts say that regardless of Brexit, London was due a house price correction as prices were too high and poor value for money. The number of sales in the city has fallen by a quarter since 2014.

"The London housing market is coming to the end of what can be described as a three to four year repricing process, in which many areas have experienced small, single digit falls,” said Richard Donnell from property portal Zoopla. “House prices grew rapidly between 2010 and 2016 and we’re currently seeing those prices fall back into line.”

But Mr Cook believes house prices in London could rebound. "The one market that might well see a bounce in activity would be central London, where overseas buyers could have the chance to benefit from a once-in-a-lifetime buying opportunity on the back of what could happen to sterling."

What will happen to rents?

Punitive tax changes and regulations have knocked the life out of Britain’s buy-to-let market, with thousands of buy-to-let landlords exiting the market since 2016. It is this, rather than whatever happens in the Brexit saga, that will have the most effect the rental market.

Rents in the capital are at record highs, fuelled by high demand and a low supply of homes. In April, Rightmove reported an 8.2pc annual increase in asking rents in London, the highest rise ever recorded, bringing the average monthly payment to £2,093.

Will stamp duty be reformed?

One thing that could override and impact to the market as a result of Brexit is stamp duty. Boris Johnson is said to be considering changes to stamp duty that include raising the property value at which the hated tax is due from £125,000 to £500,000 and bringing down the top rate – payable on properties worth £1.5m or more – from 12pc to 7pc.

He has also gone further and agreed to think about a more radical measure: switching the liability from the buyer to the seller.

According to analysis by Savills, Mr Johnson's plans would free more than 300,000 property buyers from stamp duty, based on 2018/19 figures. Added to the number of properties sold that are already exempt from the tax, this means that a total of 651,500 transactions from last year wouldn't have paid stamp duty.

This is equal to 71pc of residential transactions in England and Northern Ireland that would be exempt from stamp duty under the plans.

The stamp duty reduction unveiled in November 2017 abolished the tax on properties worth up to £300,000 for first-time buyers, and where properties are more expensive, the first £300,000 is free of duty provided the property's total price is £500,000 or less.

Stamp duty discourages house moving as the bill can often amount to more than £20,000 for existing homeowners.

Mr Leeming said that although clarity is urgently needed on Brexit to get the market moving again, Mr Johnson must see stamp duty "as a priority".

"Prohibitive stamp duty charges have long been a challenge for those on all rungs of the property ladder, and so both buyers and sellers will now be eagerly awaiting confirmation from him and his cabinet on how they decide to address this," he said.

Source: https://www.telegraph.co.uk/property/house-prices/property-predictions-2019-should-buy-now-wait-brexit-will-house/

Birmingham’s Regeneration Plans Start to Pay Dividends

2019-08-13T15:36:00.000+08:00

Birmingham’s Regeneration Plans Start to Pay Dividends

Second city growth driven by metro mayor, low rents and local tech talent

From the ruins of industrial dereliction, a new district has sprung back to life near the centre of

Britain’s second city, Birmingham.

Where factory workers once produced Bird’s custard and the progenitors of Peaky Blinders the early 20th century gangsters popularised by the BBC — patrolled the smoggy banks of the canals, a myriad of start-ups from micro-distilleries to independent filmmakers, have taken root. The old industrial wastelands of Digbeth that fringed the city centre have been reborn.

“It’s like Brooklyn before Brooklyn got expensive,” says Melissa Snover, a New Yorker, who chose to set up her high-tech nutrition company, Nourished, in Digbeth partly because rents are comparatively cheap and partly because there is plenty of tech talent from the city universities.

The demolition of high-rise buildings and highways that once ringed the city has liberated Digbeth and allowed it to gradually reintegrate with Birmingham’s centre as part of a much larger multibillion-pound regeneration programme of public and private investment.

This has seen the city, and the wider West Midlands region it is part of, become one of the brighter spots in the UK economy. It is now growing faster than any other city region outside London, with output up by 35 per cent over the past five years.

The region is also becoming a flagship for devolved government that led two years ago to the election of six metro mayors, including Birmingham, Manchester and Liverpool.

“Before you would have come to Birmingham, got out at New Street station and thought ‘no thanks’ and gone on,” said Waheed Nazir, corporate director for economy at the city council, who has been at the heart of regeneration plans since 2012.

What sets the city’s recent transformation apart, said Mr Nazir, is the speed with which it has taken place, despite an initially gloomy backdrop. “We were going through one of the worst recessions,” said Mr Nazir of the aftermath of the 2008 financial crisis. “It was a very difficult time, developments stalled. But it was also a great opportunity to set out to do what we wanted.”

That involved expanding the central metropolitan area of Birmingham, pursuing status for it as an enterprise zone with tax incentives to encourage investment, and breaking down concrete barriersincluding an old brutalist library — that physically blocked various parts of the city from linking up. Buttressing these developments has been a large influx of foreign capital, investment in local tram and metro line networks, and the prospect that by 2026 the city will be connected to London by the HS2 high speed rail project.

Recommended Tech start-ups Tech jobs spread out from London across UK Since 2010-11 the region has received £1.5bn of public sector money, boosted by £3.1bn of private sector investment, according to the city council. In 2018, the West Midlands was the leading region outside London and the south east for foreign direct investment.

The latest data suggest that Birmingham has found a formula to correct the concentration of growth and wealth in the south-east that has coloured both politics and economics of the UK for 40 years.

“The thing that tells you the turnround story is that young Londoners are voting with their feet,” said Andy Street, the former chief executive of department store John Lewis turned Conservative politician, who was elected as the West Midlands Combined Authority (WMCA) mayor in 2017.

In 2018, just over 19,000 people migrated from London to the West Midlands, compared with about 18,272 who moved the other way — a symbolic reversal of a decades-long trend.

The city, held back from “overheating” by Westminster in the 1960s, had been through vertiginous decline, culminating in the closure in 2005 of what was Britain’s largest car plant at Longbridge at the cost of 6,000 jobs. “By 2007 we had the highest population of people with no qualifications and the smallest with good qualifications,” said Mr Street.

“I won’t spin the yarn that everything was terrible and I improved it,” he said, adding that things were already picking up several years before he became the mayor. But he believes his executive role has helped to spread the benefits of Birmingham’s revival to cities such as Wolverhampton and Coventry, under WMCA control, and encouraged joined-up thinking in tackling everything from housing shortages to the decline of high streets.

Wage levels are rising faster than any other region in the UK and about 300,000 jobs have been created in seven years.

That is not to say there are not still big challenges. As recently as 2016 the Resolution Foundation, a think-tank, said in a report that the West Midlands remained near the bottom of the city region league table in terms of productivity. Areas of real deprivation remain cut off from the labour market and struggling with insufficient social housing.

And while unemployment across the area is falling, among 20 to 24-year-olds it rose from 16 per cent to 20 per cent between 2017 and 2018, according to the Office for National Statistics.

Nonetheless, the sense of a city on the up has been underscored not only by the flourishing start-up culture in Digbeth, but also the large scale investment by big financial services companies in the city centre. HSBC moved its UK headquarters to Birmingham last year along with 1,000 jobs.

The city centre has also seen PwC invest in a new regional headquarters as part of expansion plans and to take advantage of the professional talent emerging from higher education. “I look at the city centre and it is unrecognisable from 30 years ago,” said Matt Hammond, regional chair of PwC.

A no-deal Brexit could knock the city back again, warned Mr Street, given how exposed the economy is to goods exports, which contribute a quarter of regional gross domestic product.

He believes deepening the devolution process will be vital to maintaining progress in the aftermath of Brexit. “Better decisions are made if they are taken locally. It empowers people and makes them feel that they have influence over people governing them,” he said.

Source: https://www.ft.com/content/f53b6ab0-b905-11e9-8a88-aa6628ac896c

The property hotspots where young professionals are buying – and house prices are rising

2019-07-31T11:49:00.000+08:00

The property hotspots where young professionals are buying – and house prices are rising

With money to spend and few responsibilities other than to have fun, being a young professional couple can be a golden time. Young professionals also exert a powerful impact on their local housing markets, with the potential to create new hotspots and keep prices moving upward in traditional ones.

Much has been written about the travails of millennials priced out of homeownership. But beyond London and the commuter belt, young and reasonably successful couples have fewer worries.

A study by Savills has identified where these young couples are investing their money in cities across the UK. Researchers focused on couples with a joint income of £40,000 or more, where the eldest partner is aged between 26 and 35. They are also known as Dinkies – double income no kids.

The research found that in many cities, including Birmingham and Southampton, these buyers can still stake a claim to life in the centre of the city. Elsewhere, including Bristol, Edinburgh and London, rapid house price growth means they are being pushed out of the most aspirational areas and into regeneration zones, bringing gentrification – and house price growth – in their wake.

Surrey Docks, London

A typical young professional couple has been thoroughly priced out of the Claphams and Islingtons they would once have aspired to. Instead, they are looking for good value, in locations where there they can use Help to Buy to cut deposit requirements.

The key choices are all south of the river: Surrey Quays, where almost one in 10 homes is sold to this demographic, followed by Greenwich Peninsula, and Fairfield in Croydon’s town centre.

Surrey Docks is the most expensive option – an average flat costs £525,000 – but it does give buyers who work at Canary Wharf or in the City an easy commute, and prices are up by 35 per cent in the past five years. Adjacent Canada Water is in line for £4 billion regeneration, which has heightened interest in this slightly forgotten location where cut-price waterfront living is the big pull.

Historically, investors have driven Surrey Docks’s market, says Tom Crowe of Harrisons Property London. Now that tax changes have caused these buyers to evaporate, young buyers have stepped in.

Heaton, Newcastle

Once a student suburb, Heaton has had impressive property price growth of 19 per cent in the past five years, thanks to an influx of young professional buyers willing to pay an average of just under £120,000 for a flat. Locals can hang out in an increasingly impressive range of cafés on Heaton Road, and it is within walking distance of both the city centre and the city’s riotous Quayside.

“Heaton has changed a lot,” says Rob Taylor of Rettie estate agents. “It was a bit of a poor relation but it has become more popular because it is the best value you can find for such a central location.” Property is mainly Edwardian red brick, with both terraced houses and “Tyneside flats” (split-level, purpose-built flats) on offer.

Right in the thick of things, prices in Piccadilly are soaring: up 14 per cent in the past two years, and 43 per cent in the past five, with an average flat now selling at just over £200,000.

For young professional couples, the wages to house price ratio is favourable in the North West, which means they can afford to live as centrally as they like. The other key locations in the city are neighbouring Deansgate and trendy Didsbury.

Best known for its train station, Piccadilly is home to loft conversions, glitzy new flats and homes overlooking the Ashton Canal. “The Northern Quarter is within walking distance, and young professionals all want to live near there because it has got all the good bars, restaurants, and shops,” says Nick Stanton of Bridgfords estate agents. His buyers tend to be first-timers aged 25 to 35, who are looking for a convenient short-term base. A lack of houses in the area means that once children come into the picture, the party’s over and they move out to the suburbs.

Kirkstall, Leeds

Regeneration and affordability are the secrets of Kirkstall’s success. Prices are up 7 per cent in the past two years and 19 per cent in the past five, with average flat prices around £105,000, with houses £178,000.

Just under three miles north-west of the city centre, Kirkstall has streets of red-brick terraced houses priced from around £135,000, Thirties semis and some (slightly dated) purpose-built blocks. “Kirkstall has grown in popularity in the last couple of years because of some major developments,” says Amy King of Manning Stainton estate agents. She points to a recently opened train station and Kirkstall Bridge, a new shopping centre.

While younger buyers still opt for city-centre flats, Kirkstall attracts a slightly older crowd who appreciate its parks and canalside walks. “Most of the houses will attract multiple offers and go over asking price,” says King.

Leith Walk, Edinburgh

More than two decades after Trainspotting, Begbie, Spud and co would barely recognise their old stamping ground. My, how the setting for Irvine Welsh’s iconic novel has changed. Grubby pubs have gone gastro, dismal estates have been razed, and you are more likely to find a Michelin-starred restaurant than a heroin addict. “The heart of Leith has got a really good choice of top-notch restaurants, there is a good evening scene, new shops, you are only 20 minutes’ walk to Princes Street and they are talking about extending the tram down there,” says Scott Brown, a partner at Warners Solicitors.

Leith Walk occupies the halfway point between the city centre and the docks. Prices in the area are up 21 per cent in the past two years, and 39 per cent over the past five. This is against the background of Edinburgh’s roaring property market, which is propping up the rest of the UK’s growth

Leith itself, a little further east, is also a popular option for young couples, and prices there are also rising strongly. A typical two-bedroom flat costs £209,000, while you can pick up a house in Leith Walk for £335,000.

Adding to the area’s housing stock, 380 new flats are being built on the site of Leith’s former tram depot, with one-bedroom flats at The Engine Yard priced from £237,500.

Bargate, Southampton

Stretching from Southampton Central Station down to the city’s rapidly regenerating docks, this ward is a prime slice of city centre and a great hunting ground for young couples who like to be in the thick of things.

Housing stock includes modern apartments overlooking the Itchen or Test rivers, where over the past decade a marina, restaurants, bars, and cafés have helped to breathe new life into this industrial stretch of the city. There are also slightly more dated purpose-built flats, and a few period conversions, closer to the city centre. Precious few full houses make this very much the territory of the young and child-free. An average apartment in this neighbourhood costs £207,000, up by 33 per cent in the past five years.

Hotwells and Harbourside, Bristol

This location is a double threat. It encompasses the modern apartments that are springing up thick and fast at Bristol’s harbourside and are popular with young office workers, as well as Hotwells, a neighbour of modish Clifton.

As buyers get driven out of the city’s smartest suburb they are going down the hill to Hotwells, where the property is more likely to be a brick workers’ cottage than in a grand Regency building. But the vibe is a bit hipper and more youthful, it’s not rammed with tourists, and the city centre is an easy walk.

Prices are mid-range, by Bristol’s standards, after being boosted by priced-out buyers moving to the area. An average flat now costs £293,000 and an average house £591,000, up 11 per cent in the past two years, and 47 per cent in the past five years.

Nelson, Norwich

This is another city where young professionals can afford the best. The city-centre ward of Nelson broadly coincides with the city’s Golden Triangle, historically its most sought-after property hotspot.

It has been described as Norwich’s Notting Hill, thanks to its independent shops and boutiques, while its tree-lined streets, quality period housing stock and closeness to the city centre all add to the appeal.

Price growth is positive – albeit subdued – as there’s not a huge amount of room for growth in this location that’s already thoroughly up-and-come. Over the past five years prices have risen five per cent, and an average flat costs £150,000, while a typical house is £297,000.

Harborne, Birmingham

This established and affluent south-western suburb has seen prices rise seven per cent in the past year and 19 per cent in the past two years. A typical flat now costs £173,000 and a house £373,000.

In the city centre, both Ladywood and the Jewellery Quarter attract their share of buyers, but Harborne stands out thanks to its proximity to two of the city’s biggest employers, the Queen Elizabeth Hospital and University of Birmingham. It has a good stock of smart period houses, with room to grow into, as well as flats.

Harborne tends to attract young professionals looking to future-proof their lives (and avoid paying for multiple moves) by heading straight to a location that is already family-friendly – but central, and not dull. “There is a nice high street with bars and restaurants and cafés popping up,” said Sarah Briggs of Knight Frank. “And the schools are also brilliant.” Good preparation for these childless youngsters.

Resources: https://www.telegraph.co.uk/property/buy/property-hotspots-young-professionals-buying-house-prices/

Weak pound and falling prices: how overseas investors are flocking to buy half-price British properties

2019-07-29T12:43:00.000+08:00

Weak pound and falling prices: how overseas investors are flocking to buy half-price British properties

The weak pound and stagnant property prices are causing a rush of overseas buyers into the British housing market, figures reveal.

As interest from domestic buyers has waned, major mortgage lenders have launched new deals to woo expats and foreign investors.

Data published this week by HM Revenue & Customs showed that the number of residential property transactions completed in June was 84,490, 16.5pc lower than the same month a year ago, as home-grown buyers hold off on purchases.

House price growth has also slowed across the country, with the key London market experiencing significant falls

The capital saw the biggest decline in property prices in the year to May, dropping by 4.4pc, according to the Office for National Statistics. This fall has caused further nervousness among domestic buyers and has allowed savvy expats to take advantage and purchase British property at bargain prices.

Contrary to the image of Britons retiring abroad to Mediterranean countries, the majority of overseas buyers making mortgage inquiries in the UK live and work in America, Asia and the Middle East.

Data compiled for Telegraph Money by Skipton International, a mortgage firm, showed that it received the most inquiries this year from the United Arab Emirate, home to wealth centres such as Dubai and Abu Dhabi.

Hannah Aykroyd of Aykroyd & Co, a London buying agent said she had seen an increase in activity from around the globe. “We have had clients flying in from Asia and the Middle East looking to buy very quickly as they believe we’re at the bottom of the market in London,” she said.

“House prices in prime areas are down about 30pc since 2014 high. Combined with the weak pound, this means some buyers – such as those from America – are looking at an effective discount of over 50pc.”

Ms Aykroyd said the weak the pound was “a strong motivator” to buy now.

Buyer beware

The most difficult task for overseas buyers is often taking out a mortgage, as interest rates tend to be much higher than those offered to domestic customers.

Foreign buyers can also find it difficult to access finance if they are self-employed or work for a firm that does not operate internationally, as this makes it difficult for British banks to verify their income. However, mortgage lenders are increasingly opening up to overseas buyers.

The latest to do so is Ipswich Building Society, which will now accept mortgage applications from British nationals living overseas who are paid in a foreign currency.

Shaun Church of Private Finance, a mortgage broker, said these deals appeal to people working abroad who return home on a regular basis and need a British base.

“More of the new banks and building societies have come into this market due to the increased demand as well as their inability to compete with the larger banks on more mainstream deals,” he said.

“The biggest supporters of this market are HSBC, which will offer the same rates to a domestic resident as one overseas, and a number of smaller building societies such as Market Harborough and Cumberland.”

Many expats also choose to hold a domestic property for investment purposes. A buy-to-let is often used to boost their income or fund their retirement, even if they have chosen to live abroad permanently.

The buy-to-let market continues to be squeezed as the Government withdraws favourable tax breaks for landlords but investing in British property is still seen as secure when compared with many other nations.

Data from Skipton International showed that buyers based in European countries tended to purchase British homes in London and the South East, while those from the Middle East were more interested in investing in the north of England, Scotland and Wales, where prices are generally lower.

However, those buying from abroad must also, be prepared to undergo more stringent and time-consuming financial checks from banks.

“It can be difficult for lenders to credit-search clients based abroad, so they often ask for additional information,” Mr Church added. “This means the process is more manual and there is usually a longer time between application and offer.”

Charlie Wells of Prime Purchase, a buying agent, said he expected the interest from expats to grow further as they tended to have a more optimistic outlook than domestic customers.

“The general view of overseas buyers is that Brexit is a bit of a circus and it will be out of town at some stage,” he said.

“Whether they are Americans, Europeans or Brits living overseas, there are no reservations about buying in Britain. “Now is the time that expats and foreign buyers can grab a bargain.”

Resources: https://www.telegraph.co.uk/investing/buy-to-let/weak-pound-falling-prices-overseas-investors-flocking-buy-half/

Lack of homes suitable for older people fuels housing crisis – report

2019-07-25T13:01:00.000+08:00

Lack of homes suitable for older people fuels housing crisis – report

England’s small towns are set to swell with increasing numbers of elderly people as they reject city living amid a hidden housing crisis caused by a lack of appropriate homes for a rapidly ageing population, a new study reveals.

Bexhill in East Sussex, Corby in Northamptonshire and Denton in Greater Manchester are forecast to see the biggest increases in populations aged 55 and above during the next two decades, according to the Royal Institute of British Architects and the Centre for Towns think-tank.

Failure to improve housing options for the elderly could add hugely to care and NHS costs, with the Building Research Establishment forecasting that inappropriate housing for the over-55s will cost nearly £20bn by 2041. Hip fractures caused by falls on stairs, excess cold and overcrowding are among the threats.

Bexhill, and Hartley in Kent, are set for a 19% increase in their over-55 populations by 2041. By contrast, cities and large towns are proving a turn-off for older home movers, with just one in five willing to consider an urban move compared with a third who want to move to a small town, polling commissioned for the study reveals. A lack of space and accessible and adaptable ground-floor homes were among problems cited.

The forecasts raise the prospect of rising generational polarisation, with the young increasingly prevalent in cities and unavailable to help look after their elders in towns and villages, where the “dependency ratio” between people aged 65 and over and those aged 15-64 is forecast to rise. The sharpest increases will be in the Yorkshire towns of Ilkley, Catterick and Knaresborough, Wootton Bassett in Wiltshire and Frimley in Surrey.

“Well-designed places can ensure that older people can continue to contribute economically and socially for longer,” the report says. “Isolation and not feeling like valued members of the community are major issues that particularly affect older people. Failure to get to grips with this will have severe consequences.”

After years of housing policy focused on first-time buyers, the RIBA is now calling on ministers to make it mandatory for all new homes to be accessible for older and disabled people, for councils to allocate sites for “age-friendly” housing and for estate agents to clearly label accessible housing in marketing materials.

She added: “You don’t entice people out of their three-bedroom family houses by offering them a small box.”

OWCH features spacious apartments, designed with wide doors and few steps to accommodate disabilities, and gives control to the residents. Hedi Argent, 90, a retired social worker, said she had looked at retirement villages but “didn’t want to be told how to live; I wanted to make the rules”.

The homes are designed in a horseshoe shape with balconies overlooking shared gardens tended by the residents. There is a large common living room and laundry, but otherwise the flats are self-contained.

“It is liberating to choose how you’re going to live and who you are going to live with,” said Jude Tisdale, who moved in in late 2016.

“It is not a seaside town like Eastbourne – heaven’s waiting room,” added her neighbour Josie Pearse, 64, a fiction writer. “Bugger that.”

Most of the women are either widowed or separated and men cannot live in the complex apart from as temporary guests. Their women-only arrangement is perhaps a sign of things to come as actuaries currently predict that women aged 65 will live two and a half years longer, to 87, than men.

“If there were blokes here, they might want to take charge or be looked after,” said Argent. “A lot of us have been in relationships or been married and a lot of us have thought, well, we’ve done that.”

Lisa Nandy, a Labour MP and co-founder of the Centre for Towns, said: “An ageing population and a widespread failure to understand and deliver the type of housing we need is causing a crisis. A decent, suitable home in your own community is one of the best ways to combat loneliness and prevent conditions like dementia from deteriorating.”

“Our current housing stock is among the oldest in Europe, and only 7% of existing homes meet basic accessibility requirements,” said Dr Anna Dixon, the chief executive of the Centre for Ageing Better. “Most new housing caters to first-time buyers and families. Most people in later life want to live in mainstream housing and stay in the communities where they currently live.”

A spokesperson for the Ministry of Housing, Communities and Local Government said safe and secure housing is a “top priority” and it now expects planning policies to use the government’s optional technical standards for accessible and adaptable homes and directly address older people’s housing needs.

Resources: https://www.theguardian.com/society/2019/jul/14/lack-of-homes-suitable-for-older-people-fuels-housing-crisis-report

How 'game-changing' inheritance tax plans would help fast-track the young onto housing ladder

2019-07-12T15:16:00.000+08:00

How 'game-changing' inheritance tax plans would help fast-track the young onto housing ladder

Britain’s most hated levy could face the most radical reform since it was introduced more than 30 years ago if new proposals are adopted into law, which would result in tax breaks that would allow more wealth to be passed down each year.

The Office of Tax Simplification (OTS), an influential independent adviser to the Government, said inheritance tax (IHT) was overly complex and “uniquely unpopular” as part of its recommendations for changes to the regime, including an overhaul of outdated “gifting rules”.

The report was commissioned by Philip Hammond, the Chancellor, in 2018 in an attempt to address issues of intergenerational unfairness.

It said the current annual tax breaks on gifts and wedding gifts should be scrapped and wrapped into a single, higher “personal gifting allowance”. The OTS refrained from suggesting what level the allowance should be set at, but noted it would stand at £11,900 today if it had kept pace with inflation rather than being frozen since 1981.

At present, sums up to £3,000, plus £1,000 for wedding presents and smaller gifts of £250, can be given away tax-free each year. Gifts in excess of this face being subject to 40pc IHT.

Andy Butcher of Raymond James, a wealth adviser, said the reforms would be a "game changer", introducing the possibility if making larger tax-free gifts that would help to fast-track younger generations on to the housing ladder.

This comes as receipts from IHT reach their highest point in history. In the 2018-19 tax year, the Treasury collected £5.4bn – more than double the £2.4bn raised a decade ago.

The report also said the seven-year gifting rule should be reduced to five. This rule allows larger tax-free gifts to be made as long as they are survived for at least seven years.

If you have already used up the main £325,000 IHT exemption and die within the seven-year gifting period, the gift may benefit from partial exemption on a sliding scale. But this so-called “taper relief” would be abolished under the OTS’s proposals

While the changes would mean a parent or grandparent would need to survive two years less to avoid a tax charge, it would also create a “cliff edge”. Anyone who died four years and 364 days after the gift was made would be hit with a 40pc tax bill. Someone gifting £50,000 would pay £8,000 more in tax if they died one day before the five-year cut-off than they would qualifying under the current taper.

The exemptions for gifts “made out of normal expenditure” should also be reformed, the report said (see Personal Account, p2, for more).

Rachael Griffin of Quilter, the wealth adviser, said removing taper relief was an “extreme” move, adding that simplification should not result in higher taxation.

The report also suggests changing how IHT and capital gains tax (CGT) are applied together. Currently, surviving spouses usually pay no IHT or CGT when their partner dies.

This quirk – the “CGT uplift” – means anyone inheriting second homes or other investments does not inherit the tax liability. The gain is calculated from the point the asset was passed to the inheritor. This is designed to prevent double taxation.

But the report suggests gains should be passed down and calculated at the historic price the deceased paid for the asset where you benefit from full exemption from IHT. Historic capital gains would not be payable when the assets were passed down, but would be added to gains from the point of inheritance if the new owner later decided to sell.

Ms Griffin said this would “drastically increase the number of people who inherit things they can’t afford”. However, Rachel de Souza of accountancy firm RSM said: “The losers from this proposal may squeal, but there is no justification for allowing a tax-free uplift for CGT and a relief from IHT”.

The OTS’s Bill Dodwell said the recommendations would make the whole system easier to understand and would not cost too much to implement, adding that tax should be understood by normal people and not just tax advisers.

Resources: https://www.telegraph.co.uk/tax/inheritance/game-changing-inheritance-tax-plans-would-help-fast-track-young/

Sterling keeps sliding on no-deal Brexit and growth fears

2019-07-10T10:23:00.001+08:00

Sterling keeps sliding on no-deal Brexit and growth fears

Sterling has suffered a torrid day, sinking to lows against the dollar not seen for more than two years apart from a "flash crash" in January.

The pound slipped below a key level of $1.2455 - just short of the low record in April 2017. Economists are divided over whether the slide was triggered by weak retail data from the British Retail Consortium showing that retail sales fell sharply last month.

The drop, the sharpest recorded since records began in the mid-1990s, compared to a period which included the World Cup last year, leading some to question whether data was distorted as a result.

Nevertheless a slew of relatively weak UK economic data was part of the pressure on the pound on Tuesday, according to Jordan Rochester, foreign exchange strategist at Nomura.

The slide "wasn’t based on a [particular] Brexit story - it’s been the slowdown in UK growth”, he said.

There has been broad-based weakening across a range of major economies, but Britain’s long spell of political uncertainty meant it was in a “worst place” than others, Mr. Rochester said.

Better than expected performance from the US jobs market last week had also boosted demand for dollars, pushing down the relative strength of sterling, he added.

Andrew Goodwin at Oxford Economics said it was hard to single out what had caused such a relatively sharp movement in sterling on Tuesday. The most likely trigger, however, was that the risk of no-deal has “become relatively high” in markets’ view.

An acid test for the pound would be the upcoming interest rate decision by the Bank of England.

“So far markets have stuck their fingers in their ears and ignored what the MPC [rate setters] have said,” Mr. Goodwin said.

This could all change if there was a sign of a pick up in economic activity, and, in particular business investment in the third quarter of the year. Bank of England “messaging could make sense” if the risk of no-deal Brexit reduce, and increases business confidence, Mr Goodwin added.

The world’s biggest asset manager, BlackRock's midyear update to markets echoed growing anxiety from investors over the October Brexit deadline.

Our indicators also point to heightened market attention to the risk of European fragmentation [and UK-EU tensions],” its report said.

“European parliamentary elections delivered a mixed result that saw anti-EU populist and other parties gain at the expense of mainstream ones. Another lingering risk: tensions related to Italian budget talks are likely to bubble up in coming months,” it added.

Resources:

https://www.telegraph.co.uk/business/2019/07/09/sterling-keeps-sliding-no-deal-brexit-growth-fears/

What would Boris Johnson's stamp duty plans mean for you?

2019-07-02T09:08:00.001+08:00

What would Boris Johnson's stamp duty plans mean for you?

In the last five years, the property market has been battered by changes to stamp duty. It’s been hiked at the top end, abolished at the bottom, and boosted for landlords, leading to a slowdown in sales, a sluggish market and a higher take for the Treasury’s coffers

Now Boris Johnson has proposed a plan to overhaul the whole stamp duty system yet again. Reports suggest that Johnson plans to drastically raise for paying stamp duty from its current level of £125,000 to £500,000 at the same time as lowering the top rate from 12pc to 7pc. What does it mean for buyers and sellers?

According to analysis by Savills, Johnson’s plans would free over 300,000 property buyers from stamp duty, based on 2018/19 figures. Added to the number of properties sold that are already exempt from the tax, this means that a total of 651,500 transactions from last year wouldn’t have paid stamp duty.

This is equal to 71pc of residential transactions in England and Northern Ireland that would be exempt from stamp duty under the plans.

Savills has also estimated that raising the stamp duty threshold to £500,000 would cut out around a quarter of stamp duty revenue for the Treasury's coffers, at £2.158bn.

It found that 41pc of stamp duty revenues from 2017/18 came from properties under £500,000, equal to £3.8bn. This total amount excludes the additional 3pc surcharge on homes under £500,000 and first-time buyer relief.

The 3pc surcharge for landlords and additional home buyers was not mentioned in the report. But if that was dropped as well, just 10pc of properties bought last year would be liable for stamp duty.

First-time buyers

The reforms would boost the buying power of first-time buyers. Currently, first-time buyers spending £300,000 or less on a property purchase will be free of duty. For first-time purchases worth between £300,000 and £500,000, no stamp duty is paid on the first £300,000, meaning a reduced rate is paid.

Boris’ change would only affect those first-time buyers now paying that reduced rate of stamp duty, as well as those buying homes worth over £500,000, which would also pay less tax.

After this change was made in November 2018, the Royal Institution of Chartered Surveyors found that there had been no significant positive impact on property sales directly as a result of this policy measure. It’s hard to see that this would boost first-time buyers any more than the previous reform did.

However, first-time buyer sales have been growing steeply in the last few years, boosted by Help to Buy and also the Government’s clampdown on landlords, which means there is less competition to buy certain properties.

Home movers below £500,000

Those selling and buying homes worth under £500,000 would benefit hugely from Boris Johnson’s reforms. While George Osborne’s changes in 2014 lowered stamp duty for this group, this change would wipe it out completely.

The changes would lift entire towns and demographics out of paying stamp duty: vast swathes of the north of England and the Midlands, where average property prices sit below £500,000, would be exempt from the tax. According to Savills in 2018/19 there were eight local authorities where there were no transactions recorded over £500,000.

This could also help improve transactions: stamp duty has long been seen as causing unnecessary friction in the market, and so this reform could boost activity. However, this part of the market has been the strongest for some time, particularly in the North and Midlands

Home movers above £500,000

Estate agents will be cheering at Johnson’s plan to reverse George Osborne’s hated stamp duty changes to the top end of the market. In November 2014, the then Chancellor hiked stamp duty for homes worth more than £925,000, which had an instant effect of slowing the top end of the market to a standstill. Ever since then, transaction levels have languished, homeowners have been unable to sell and prices have dropped in many expensive areas.

Cutting the top rate of stamp duty from 12pc to 7pc would likely reinvigorate the market. However, this wouldn’t last long, according to Lucian Cook, head of residential research at Savills. “There would be a sentiment boost for the housing market generally, and that could result in short burst of activity and house price growth but it won’t be dramatic. At the end of the day, rational economics will come in and look at the total cost of purchase.”

It’s unclear what effect this will have on those buying properties worth below £925,000, but it’s assumed that they would pay less stamp duty due to the total cut on stamp duty below £500,000. However, there is the risk that this could lead to a return to the previous and hated slab system, which created a cliff edge effect where if the value of the property was £1 above a threshold it could cost you thousands more in stamp duty.

Downsizers

“These transactional taxes create friction and inefficiencies in the market,” adds Cook. If the changes get the property market moving again, then downsizers may be a big winner from the changes.

Many downsizers are currently stymied as they can’t sell their large family homes to move into somewhere smaller as the market for these properties has seized up - largely as a result of the higher rate of stamp duty on homes over £925,000. This change could open up the market and get the market moving again.

Resources: https://www.telegraph.co.uk/property/uk/would-boris-johnsons-stamp-duty-plans-mean/

The property hotspots in the North and Midlands that are powering the booming market

2019-06-24T13:22:00.002+08:00

The property hotspots in the North and Midlands that are powering the booming market

Watford Gap near Daventry, the oldest motorway services in the UK, turns 60 this year. For those of us who live down south but hail from the North or the Midlands, it is symbolic as the unofficial dividing point between the top and bottom halves of the country, a signpost home. Long have southerners been warned of nosebleeds should they pass it.

This year, significantly, house prices are set to accelerate faster in the North and the Midlands than in the South, as a result of the continuing property market cycle.

A new study by Savills forecasts house price growth of 20 per cent in the North and the Midlands over the next five years, dwarfing the nine per cent rise in the South and five per cent in London.

“Typically we see the North and Midlands outperform the South in the second half of a housing market cycle, when they have more capacity left for price growth and look comparatively good value,” says Lucian Cook, head of residential research for Savills.

“The indicators show that we are now in that period. It has been a long time coming, given the extent to which London pulled away from the rest of the country after the global financial crisis.”

Northern Power Houses

These optimistic growth forecasts are being powered by multi-billion-pound infrastructure projects. It has been five years since George Osborne launched the Northern Powerhouse project, and as the investment boom along London’s Crossrail dies down, interest in the Northern Powerhouse’s rail network is gathering pace.

The Government has committed £13 billion to develop transport links across the North spearheaded by High Speed 2, which is set to open in 2026.

Substantial funding is going into other jobs and infrastructure projects such as the Sheffield innovation corridor, £3.4 billion into 17 enterprise zones, the National Graphene Institute in Manchester, the National Institute for Smart Data Innovation in Newcastle and the Advanced Wellbeing Research centre in Sheffield. Durham and York have been selected as locations for new institutes of technology.

“We expect better performance in the top half of England to be underpinned by economic growth and wealth generation within the region, especially as the Northern Powerhouse gains momentum,” says Cook. “Irrespective of Brexit uncertainty, markets in London and the more expensive parts of the South East are bumping up against the constraints of mortgage regulation and stamp duty costs.”

The value gap above the Watford Gap

Although we’ve reached that inevitable turning point in the market, properties in the East and West Midlands, North West, North East and Yorkshire and Humberside look comparatively cheap – for now.

The average house price in the North, according to Savills’ research, stood at £187,639 at the end of 2018, less than half the value of a home in the South (£398,316). This is a record gulf between the two: in 1995, the average sale price of a house in the North was 64 per cent of that in the South. This fell to 59 per cent in 2006 and now sits at 47 per cent.

The value gap between the Midlands and the South mirrors that during the recession of the early 2000s, with the average in the central belt of the country 52 per cent of the southern section. The disparity was far smaller in 1995, when a property in the Midlands cost 67 per cent of a house in the South.

York vs Winchester

The value gap can best be summed up by the tale of York and Winchester, two historic hotspots of the North and South respectively. In 2009, a buyer in the Ouse-side city would get 50 per cent more space for their money than in its Hampshire counterpart. In real terms, £1 million in York would buy 3,710 sq ft, compared with 2,044 sq ft in Winchester, according to Savills.

Interior designer and TV presenter Linda Barker, and her husband Chris are selling their four-bedroom house in Ellerton, on the outskirts of York, for £445,000 with Savills; next, they plan to renovate a Georgian property in the East Riding.

“We have lived here for 15 years and changed the house considerably, with great sensitivity to the original cottage,” says Barker. “We extended the small cottage kitchen into a contemporary space with floor-to-ceiling glass panels looking on to the farmland beyond and converted a lean-to on the side into a dining room with solid wood bi-fold doors on two sides of the room, which open on to the patio.

“It’s not unusual to look out of the tall windows and see deer and pheasants during the daytime and a barn owl at dusk.” She describes Ellerton as a friendly village with both young families, retired residents and commuters working in Leeds, York and London.

Top half hotspots

We’ve found 10 of the most sought-after villages and suburbs in the North and Midlands to turn your head – wherever you live in the country.

Prestbury, Cheshire

Average house price: £860,606

Ten-year growth: -2 per cent

The village of Prestbury, on the river Bollin and in sight of the foothills of the Pennines, is home to the highest house prices in the top half of the country. Over the past decade, values have dropped two per cent.

Prestbury and Bowdon (in Trafford) are the only two wards in the whole of the North and the Midlands where more than one in five sales in 2018 were over £1 million. This statistic makes the two wards the equivalent property markets to Surrey’s most affluent local authority areas of Elmbridge, which includes Cobham, Esher and Weybridge (otherwise known as “the stockbroker belt”.)

Prestbury, in Cheshire’s Golden Triangle, is considered one of the UK’s poshest postcodes, and has had a string of celebrity residents including the footballers Wayne Rooney and Peter Crouch, and comedian Paddy McGuinness.

Bowdon, Greater Manchester

Average house price: £795,013

Ten-year growth: 28 per cent

Bowdon’s railway station opened in 1849, turning the agricultural village to the south of the city into a commuter hotspot. Its oldest building is the Grade II listed Bowdon Old Hall, once part of the Dunham Massey Estate. Plans were filed last June with Trafford Town Hall to restore the 18th-century building and add two contemporary eco homes in the grounds.

The Grade I listed Dunham Massey Hall and grounds is under the care of the National Trust, and provides a social scene with a theatre, cinema and art exhibitions.

The Duchy, Harrogate, North Yorkshire

Average house price: £649,460

Ten-year growth: 34 per cent

The Duchy, in the centre of Harrogate is an enclave of leafy streets lined with large period houses that were once the homes of wealthy mill owners in the Industrial Revolution.

The area comprises around 1,000 properties and parkland, and is one of the most sought-after spots in the UK. Properties in The Duchy rarely come to the market and they sell fast, which is reflected in the price. According to James Wort, of agent Strutt & Parker, the number of buyers relocating to the area from London is up 20 per cent on last year. “They are usually families in their 30s and 40s who already have roots in Yorkshire, are attracted by the schools, and want to be close to grandparents,” he says.

Ponteland, Northumberland

Average house price: £494,178

Ten-year growth: 3 per cent

The commuter village of Ponteland is nine miles north-west of Newcastle and has been built around its Saxon church and the river Pont. It’s just a few miles from the airport and is on the edge of rural Northumberland.

“We have a strong community ranging from first-time buyers to retirees who enjoy the leisure centre, rugby, cricket, tennis and bowls clubs, and two pubs, the Diamond and the Blackbird,” says Elaine Newbigin of agent Sanderson Young.

The most salubrious part of the village is the Darras Hall Estate that was built in the 18th century for “well-to-do folk”; 21st-century residents have included former footballer Alan Shearer.

Bramhall, Greater Manchester

Average house price: £489,329

Ten-year growth: 41 per cent

Bramall Hall is a grand timber-framed, 14th-century Tudor manor house-turned-museum in 70 acres of grounds. The property was owned by just three families over 800 years before being run by the local council. It’s the heritage heartbeat of this village in the suburb of Stockport.

Thanks to the stations at Bramhall and Cheadle Hulme, it has become a semi-rural commuter hotspot, and has a Waitrose and a high street dotted with independent shops.

“The village is home to a cross section of housing stock where you can find anything from new-build apartments to larger Victorian villas,” says Mark Holden of Savills. “We see a lot of people moving from Manchester who want to enjoy more green space and a better quality of life.”

Arden, Warwickshire

Average house price: £818,009

Ten-year growth: 92 per cent

The most expensive ward in the Midlands is Arden, which comprises a series of villages to the north-west of Warwick including Lapworth, Kingswood, Rowington, Wroxall, Shrewley and Leek Wootton.

Values in the area are underpinned by good quality housing stock and the surrounding countryside, combined with accessibility to the growing employment market of Birmingham and the transport links of the M40. The new HS2 interchange at Solihull is also set to improve accessibility of the area to London.

“Over the past 10 years it has attracted an increasingly affluent set of buyers, who have become well-served by new gastropubs and the amenities available in Stratford upon Avon and Leamington Spa,” says Savills’ Cook.

Exton, Rutland

Average house price: £612,571

Ten-year growth: 33 per cent

Rutland is England’s smallest county. It’s very pretty and has limited housing stock, so demand here is always high. Strutt & Parker’s Ed Brassey sees commuting London families, local buyers and overseas purchasers drawn to Exton, an estate village where most of the homes are owned by the Earl of Gainsborough.

“People choose to buy in Exton compared with neighbouring areas because of the very pretty countryside, excellent public schools in the area, and good primary schools” says Brassey.

Rutland Water, an artificial lake and nature reserve, is nearby, and it only takes 45 minutes to London from nearby Peterborough station. Other sought-after villages in the area include Empingham, Egleton, Edith Weston, Manton and Hambleton.

Snitterfield, Warwickshire

Average house price: £578,780

Ten-year growth: 44 per cent

Legend has it that Charles II escaped after his defeat at the Battle of Worcester along Monarch’s Way, a footpath that runs through the village of Snitterfield, on the edge of Stratford upon Avon.

It has an active village scene centred around the shop, pub, tennis club and church, yet it’s well connected by motorway to Stratford, Warwick and Leamington Spa.

“The area is very highly regarded and the homes mainly consist of traditional pretty listed houses. The village has a lot to offer, and house prices reflect this,” says William Ward-Jones of Knight Frank. “The schools in the area have a good reputation, which also adds to the desirability of the village for families.”

Dorridge, West Midlands

Average house price: £529,643

Ten-year growth: 47 per cent

Picturesque Dorridge, a village within Solihull, serves as a commuter spot for Birmingham, and sits on a speedy train line to both the capital of the West Midlands and London (the fastest train takes less than an hour and 40 minutes into Marylebone).

“The amenities offered by local areas of Solihull and Stratford upon Avon mean that you aren’t obliged to head into Birmingham for a cultural scene,” says Knight Frank’s Ward-Jones. “A lot of people living in these areas commute into Birmingham for work, so the option of spending your weekends elsewhere is usually a welcomed relief.”

Dorridge is surrounded by golf clubs, and David Henderson of Savills recommends local gastropubs The Punchbowl and The Boot Inn.

Richard Stevenson and his wife Jen have lived in the Grade II listed Darley Mill for 13 years. A collector and trader of antique architectural artefacts such as garden statues, gates and fireplaces, Stevenson has lovingly restored the 17th-century watermill that is in the village of Knowle, next to Dorridge. It’s now on the market with Savills for £2.5 million. “The sad story of Darley Mill is that in the Eighties a developer bought the property,” says Stevenson. “They added chipboard floors and plaster, and covered up the original structure. The biggest challenge of the restoration was stripping all of that back and then converting the industrial building into a home.”

He is now looking for his next project. “I can’t live in a finished house. I have poured my blood, sweat and tears into Darley Mill and hope the right family can enjoy it,” he adds.

Nassington, Northamptonshire

Average house price: £533,822

Ten-year growth: 45 per cent

The villages of Nassington, Yarwell, Wansford, Fotheringhay and Apethorpe, in the ward of Prebendal might just be the most conveniently-located cluster of villages in England.

Peterborough is on their doorstep, from which the train takes 50 minutes into Cambridge and the UK’s knowledge corridor; trains to London take about the same time, making it an easier commute than many places far closer to the capital. They are surrounded by green rolling countryside and are close to some renowned private schools, including Uppingham and Oundle. The beaches of north Norfolk are just over an hour’s drive away.

Nassington has Anglo-Saxon roots and the Viking king Cnut adopted a hall in the village to hold court. The Queen’s Head Inn is the popular local pub with a beer garden that runs down to the river Nene. “The area has low crime and is truly picturesque,” says Shepherd Ncube, founder of estate agent Springbok Properties. “It’s a hit with professionals, especially as you can find properties with prices that are bang on the national average.”

Resources: https://www.telegraph.co.uk/property/house-prices/property-hotspots-north-midlands-powering-booming-market/

Retirement Living

2019-06-21T12:50:00.000+08:00

Retirement Living

Care homes and retirement housing each face challenges, but the demand for these products will only grow as the country's population ages

RETIREMENT HOUSING

Retirement housing has been a feature of the UK housing market for decades. The bulk of existing stock is sheltered housing for social rent, built using grant funding in the 1970s and 1980s. Much of the balance is made up of owner-occupied homes, built by specialised housebuilders such as McCarthy & Stone.

A more investible market is beginning to emerge, however. Demographic and affluence trends show there’s huge potential: an ageing population with vast stores of housing wealth is an attractive customer base. New Zealand, the US and France serve as examples of the potential for retirement housing to grow into a large scale and appealing asset class.

The sector so far

There are 730,000 retirement housing units across the UK, according to the Elderly Accommodation Counsel (EAC). More than half these homes, 52%, were built or last renovated over 30 years ago.

There are two models for developing retirement housing for sale. The first, and simplest, is largely indistinguishable from the traditional housebuilder sale model, with a price premium to reflect the added cost of providing communal facilities such as a residents’ lounge, café or gym. Alternatively, a developer might charge an 'event fee' – a charge when the resident sells their property, usually for a proportion of the sale value – to fund these shared amenity spaces.

It’s only in the last few years that we have started to see institutional investment into the sector. Legal & General assembled Inspired Villages from its acquisitions of Renaissance Villages and English Care Villages in 2017, and has recently made headlines by launching its urban retirement brand Guild Living. ReSI REIT has been building its portfolio of retirement housing, purchasing schemes from Aviva and Places for People. And Goldman Sachs-backed Riverstone aims to build a London retirement housing pipeline worth more than £2 billion over the next two years.

More recently, some developers have departed from these traditional models. Auriens and Birchgrove will shortly begin letting retirement homes for private rent, each targeting very different price points. While retirement PRS is unusual today, there are excellent reasons for older people to choose this tenure.

In the case of Goldman Sachs-funded, luxury London scheme Auriens, customers will avoid a stamp duty bill equivalent to over a year’s rent by choosing not to buy. In the case of more mid-market Birchgrove, renting enables residents to unlock the equity held in their former homes. The nation’s largest retirement housing developer, McCarthy & Stone, has also started offering homes to rent in its schemes.

There is significant untapped potential in retirement homes for rent. While many older households own their homes, a rent-to-rent model could help them move into retirement housing while retaining ownership of their family home and avoiding stamp duty.

We estimate that more than 570,000 households over 75 could afford to rent a retirement home using the rental income from their main home.

Prior to 2000, 80% of retirement housing supply was on smaller schemes with fewer than 50 homes. More recently, the bulk of supply has come from larger developments, with schemes of over 50 homes making up 56% of supply in the ten years to 2018.

As the sector continues to move towards a care-based model, developments will get larger to incorporate efficiencies of scale. Larger schemes can also accommodate a range of tenures more flexibly, as demonstrated by the Extra Care Charitable Trust on their large, multi-tenure developments.

The largest retirement village in the UK today is Lark Hill Village in the West Midlands, with 340 homes. In the future, this size of scheme could become the norm.

Risk and mitigation

Retirement housing currently sits across two planning use classes. The C3 use class is the same as for regular residential developments, and requires a developer to provide affordable housing. The C2 use class requires some kind of care to be provided on site, but without an affordable housing contribution.

Guidance on the amount and type of care needed to qualify as C2 is inconsistent across the country, leading to uncertainty over whether a potential retirement living scheme will be viable. In London, guidance is clearer, in that C2 developments are expected to provide both care and affordable housing, putting them at a disadvantage to C3 schemes.

Clarity on what level of care is required on C2 developments, perhaps through an update to National Planning Practice Guidance, would reduce this uncertainty and could unlock more retirement housing development, particularly if it levelled the playing field for schemes in London.

Some retirement living providers have ‘event fees’, charging former residents a proportion of the property’s value on resale. Poor communication of what these fees pay for and when they are levied has harmed the sector’s reputation.

Government has promised to implement the Law Commission’s recommendations for event fee reform, including restrictions on when they can be charged and standardised information to be included in marketing and sales documents. New Zealand, which has a better-established retirement living sector, enacted similar legislation back in 2003.

This suggests that greater transparency around event fees could help rebuild trust between residents and developers, enabling faster retirement housing delivery.

Evolution

We estimate that the 730,000 retirement housing units across the UK are worth just under £100 billion. Accounting just for today’s over-75 population, we believe that the retirement living sector could grow to 1.7 million homes at full maturity. This is an increase of 138% over current stock. Accounting for population growth, this figure would be even higher.

We noted in our earlier publication (Spotlight on Retirement Living, 2018) that the supply of sheltered homes for social rent is in line with need. This additional stock will, therefore, comprise a mix of market sale and intermediate homes, either privately rented, shared ownership, or new products such as rent-to-rent. The mix of different housing tenures and types required affects the values of these homes.

Accounting for the tenure of this additional stock, we estimate that at full maturity the UK’s retirement housing sector could be worth £244 billion.

To put this figure into context, we have calculated the value of housing owned and occupied by the over 65s to be over £1.6 trillion. Much of the increase in the value of the retirement housing sector could be funded through older people choosing to downsize. The challenge here will be providing a product that can tempt these older residents out of a home they’ve likely lived in for decades.

The potential benefits of a larger retirement living sector are substantial. Offering homes that allow older people to age in place, retirement villages can help free up much-needed family housing, reduce the nation’s social care costs, and address feelings of isolation and loneliness in the older population. Based on research from Demos and The Aston Research Centre for Healthy Ageing, the government saves between £1,000 and £1,540 per year for each person moving into retirement housing with care.

CARE HOMES

Almost 420,000 people live in elderly care homes in the UK, accounting for just under 15% of the population aged over 85, according to LaingBuisson figures. The ONS projects a 36% increase in the 85+ population by 2025, and we expect to see a corresponding increase in care home demand.

However, despite the demographic drivers supporting care home demand, some operators are facing financial pressure due to a heavy reliance on local authority-funded residents.

Investment

Elderly care home investment was £1.3 billion in 2018 across 26 deals. That’s almost double the investment we saw in 2017, £0.7 billion, despite a similar number of deals (24). Net initial yields averaged 6.6% in 2018, slightly down from 6.9% the previous year. While average yields only compressed by 22 basis points, last year also saw three transactions with yields below 4.0%, with Aberdeen Standard paying a record low 3.75% for Moore Place in Esher.

Just two deals made up more than half the value invested last year: Aedifica’s acquisition of the Forest portfolio from Lone Star, and Chinese private equity firm Cindat’s purchase of HCP’s Ice portfolio. This interest from overseas marks a change from 2017, when 74% of investment volume in elderly care homes was domestic.

The long lease lengths and indexed rents on care home leases make them attractive for investors. Leasing to an operator means investors can expect a stable, steady rental income stream, similar to more established property sectors such as offices.

Risk and mitigation

Four Seasons has dominated recent elderly care headlines with their fall into administration. This comes alongside a 33% increase in insolvencies for elderly and disabled care homes between 2017–18 and 2018–19, according to our analysis of Insolvency Service figures.

Care homes are funded through a mix of sources. Residents with more than £23,250 in savings (more in Wales and Scotland) must pay for care themselves, while local authorities fund care for those below this savings threshold.

Local authority funding for care homes is severely restricted, with the state paying substantially lower rates than an individual funding their own care. This puts financial pressure on care homes with a high proportion of local authority-funded residents. Without reform, we are likely to see more care homes close as they struggle to remain profitable on local authority fees.

In spite of these funding challenges, the UK’s ageing population will drive growing need for elderly care. For the many care home operators attracting a high proportion of private paying residents, it’s possible to deliver strong and sustainable returns.

Evolution

We estimate that, in pure numbers terms, the amount of care home places available today is broadly in line with need.

That’s not to say there is no potential for growth, however. As with retirement housing, many of the UK’s 470,000 care beds are in dated buildings with facilities that are no longer fit for purpose. The number of care beds is decreasing year on year, as unviable, smaller or older homes close faster than the restricted rate of new development. As stock levels fall and the number of older people increases, we expect a swell of demand for new care home development over the next few years.

While there are many reasons a person might move into a care home, one of the most common causes is the onset of dementia. The Alzheimer’s Society reports that 70% of elderly care home residents in 2019 had dementia or severe memory problems, and one in six people aged over 80 across the UK suffered from the illness. PHE estimated that 645,000 people aged over 65 in England had dementia, of whom just two thirds (68%) had a diagnosis.

These conditions require careful management. While retirement housing may be suitable for helping older people live independently without care for longer, even the best-designed retirement village cannot hope to care for dementia patients without specific care facilities and staff on site.

As the population with conditions such as dementia grows, the need for care homes and dementia care facilities will rise in turn. We would expect demand for retirement housing to be strongest on village schemes offering the option of residential and dementia care on site, so that residents are able to age in place.

Resources: https://www.savills.co.uk/research_articles/229130/283708-0

Market In Minutes: New Homes and Buyer Sentiment

2019-06-20T10:23:00.000+08:00

Cautious optimism returns to the market

Despite ongoing political uncertainty, there has been a significant increase in buyer confidence in the first quarter of 2019, resulting in greater interest. Realistically priced properties are attracting particular interest, especially in the new build market. Here, the level of viewings and new applicants are up considerably. However, this increase in enquiries isn’t yet translating into commitment and transactions.

At a national level, Savills viewings and new applicants for new build homes grew by 35% and 31% respectively in Q1 2019, compared with the same period in 2018. This jump in new build buyer interest has been spread across the country, but has not been universal. Areas which have seen a particular up-tick include London and markets in its commuter belt, as well as Glasgow and Edinburgh.

Buoyancy in buyer interest has returned to some markets as a result of Brexit fatigue and stabilising consumer confidence. Buyers appear to be responding to realistic pricing and sales incentives in a needs-driven market.

Buyer interest The percentage change in Savills new applicants from Q1 2018 to Q1 2019

SENTIMENT BOUNCES BACK

In some areas, there has been an improvement in sentiment in both the new build and second-hand markets, although this bounce back seems more pronounced in the new build market.

According to the Home Builders Federation survey, new build buyer confidence is at its highest since June 2017. It has moved from being the second biggest constraint on development in Q4 2018, to the ninth biggest constraint (out of 15) in Q1 2019.

Net reservations on new build sites were also up. The annual balance of opinion jumped from -28% to 18% between February and March 2019. Housebuilders have remained optimistic that sales rates will rise.

This improvement is arguably being seen in the wider market, with the RICS UK Residential Market survey for April also pointing to an improvement in market sentiment. Although still in negative territory, there has been an up-tick in the number of surveyors reporting a rise in new enquiries. These rose by a considerable 14% in March and a further 1% in April’s survey. The results suggest that, to some extent, sentiment is returning to the market as buyers adjust to uncertainty.

There is widespread recognition that Brexit isn’t likely to be resolved soon, so decisions to buy can’t be delayed indefinitely. The extended deadline of 31 October has released some pent-up buyer demand, providing the market with greater confidence.

PRAGMATIC PRICING

Although the bounce-back in sentiment and buyer activity in the new build and wider market are positive signs, they are not necessarily a signal for rising prices. There has been the greatest interest and activity in those areas with realistic price adjustments.

According to Nationwide, annual UK house price growth was just 0.8% in May. Price corrections in London have started to ripple out to the South East, suggesting that this slowing in prices is not a temporary trend.

However, regional house price growth continues to defy the ongoing uncertainty. Prices in the year to March grew by 4.8% in the West Midlands, 4.5% in the East Midlands and 4.4% in Scotland.

The greatest changes in new build buyer activity appear to be concentrated in two areas: First, areas such as Scotland, where price growth remains steady and houses are relatively affordable. And second, areas such as London and the South East, where price corrections have provided opportunities for buyers.

As the market continues to be price sensitive, a greater number of transactions are subject to price reductions. To maintain or increase transactional activity, pricing needs to be pragmatic.

MORTGAGE APPROVALS CONTINUE TO RISE

Transaction volumes have remained relatively flat, with national transactions falling by 0.5% in March, according to HM Land Registry. Regionally speaking, London, East, South East and South West maintained their downward trajectory with annual falls of 7.5%, 5.7%, 6.6% and 6.2% respectively in March

Although transactions have fallen across all regions, activity has fared better in the Midlands, North and Scotland, mirroring the trend in house prices.

But mortgage approvals are up. According to UK Finance, in April 2019 the number of mortgage approvals rose by 8.6% compared with the same month last year.

In terms of who is buying, UK Finance figures reveal that first-time buyer transactions overtook home movers in November 2018 and have continued to grow. This growth has been fuelled by Help to Buy, cheap mortgage rates, price reductions in some markets and other sales incentives.

In March 2019, 28,800 first time buyer loans were completed. However, this figure is actually down 2.4% when compared with the same period last year.

Home mover mortgages and buy to let mortgages were also down when compared with March 2018, but by a greater degree, falling 6% and 9.1% respectively.

While uncertainty is having an impact across the housing market, first-time buyers are proving the most resilient.

Resources:https://www.savills.co.uk/research_articles/229130/283609-0?utm_source=ExactTarget&utm_medium=Email&utm_term=5234181&utm_content=7323483&utm_campaign=New+Homes+MiM+June+2019+-+Gaby+Foord+-+NONPERS

How baby boomers are swerving stamp duty and freeing up cash

2019-06-19T08:30:00.000+08:00

How baby boomers are swerving stamp duty and freeing up cash

While millennials continue to dream of becoming first-time buyers, record numbers of retirees are choosing to swap home ownership for renting. This is to beat high levels of stamp duty, free up cash to help family members onto the property ladder, and turn their home into a source of income. Retirees are also becoming increasingly interested in flexible, city-central living.

Research by Hamptons International found that the number of older renters has risen by 61 per cent since 2012, up 8 per cent in the past 12 months alone. Around a third of this group are pensioners. It means that 800,000 homes in Britain are now rented by someone over the age of 50.

The highest concentration of retiree renters is in south-east England; here around one in every five tenants is over the age of 50. Next most popular with this group are the South West, North West and Wales, where older tenants account for between 15 and 16 per cent of all renters.

So what are the main reasons attracting baby boomers to up sticks and join Generation Rent?

“Older tenants might be renting for many reasons,” said Aneisha Beveridge, head of research at Hamptons International. “In some cases, they simply can’t afford homeownership. For others who were homeowners, it may help them free up some cash for their retirement or to pass down to younger generations. And some find there are many benefits to renting rather than buying.”

Gift the family home to your children

Some retirees, hoping to keep their wealth out of the hands of the taxman, are choosing to gift their home to their children, while moving into rented accommodation themselves.

By making use of this “potentially exempt transfer” clause, it's possible to cut down your inheritance tax bill significantly. However, warned Lucy Brennan of accountancy firm Saffery Champness, there are limitations.

“You must live for at least another seven years for the gift to be exempt from inheritance tax,” she said. “And you can’t simply hand the property over nominally but still live there, as it would then still be subject to tax when you die. If you do continue to live in it you have to pay market rent.”

Help your children onto the property ladder

Over-50s looking to give a helping hand to the next generation are instead deciding to sell the family home, then use some of that income to rent a property for themselves while gifting the rest to their children or grandchildren in order to help them buy their first home.

“This is something we see quite often,” said Brennan. “But you have to be careful to ensure you retain enough of the money to cover your own accommodation costs − these could increase rapidly if a person suddenly needs to be moved to a care home.”

Sidestep stamp duty and rent out your home

Rents are hitting record highs; the cost of a new let in Britain rose by an average of 2.7 per cent over the past year, according to Hamptons.

Many retirees are capitalising on this to generate a healthy income by renting out their home to growing families in need of the extra space while moving to a smaller rented property themselves.

Older tenants doing just this also benefit from not having to cough up for the stamp duty and legal fees entailed when buying rather than renting a downsizer property.

A lack of downsizer options

Aside from the financial perks, many over-50s have no choice but to rent out rather than sell their homes. Dwindling interest in buying larger properties (partly due to higher levels of stamp duty), and a shortage of two and three-bedroom homes for sale means there is fierce competition between both downsizers and young buyers looking to move up the ladder when one does come onto the market.

“This lack of supply feeds into prices, and unfortunately for many, it’s just not worth downsizing once the cost of moving and stamp duty are taken into account,” said Steve Wilkie, of financial advisor Responsible Life. The firm found that in the worst affected areas, which include Cambridge, Oxford and Cardiff, there are around three times as many four-bedroom houses for sale as two-bedroom homes. According to Hamptons, 44 per cent of all over-50s in rented accommodation live in two-bedroom properties.

With Brexit uncertainty holding many potential sellers back from putting their property on the market, some experts are calling the situation a “downsizer crunch”, which risks leaving older people with no option but to rent rather than buy a smaller home.

Relive your youth

Many retirees find that swapping large homes, often far from their loved ones, for rental properties in more accessible and vibrant places can offer a new lease of life. Often retirement home developers report groups of friends requesting to rent properties next door to one another, creating the feeling of moving back into university halls.

Renting also presents the possibility of living in the centre of a city, where buying property may otherwise prove too expensive. As retirees look for interesting ways to fill their time and pursue new hobbies, being in a city centre near museums and galleries is becoming increasingly popular among older generations.

Around four years ago Neil Holloway and his wife, both in their Seventies, decided to trade in their eight-bedroom house with a swimming pool on the outskirts of London to rent somewhere closer to the city. They now live in East Village, a rental development by Get Living in the former Athletes' Village in Stratford where Holloway volunteered during the 2012 London Olympics.

“There's masses to do and great transport for us and the grandchildren,” he said. “It’s a very new community, so there’s lots of opportunities to meet people. They host lots of events like supper clubs and resident socials.”

Peace of mind

Another benefit of renting rather than buying in later life is the ease of not having to think about home maintenance or worry about leaving the house in order to travel.

For Holloway and his wife, this was a key draw. “I no longer have to be concerned about things like a leaking roof or mowing the lawn as someone is always here to sort it for me,” he said. “Now if I want to go away for six weeks, I don’t have to worry about leaving the house, I can live exactly the kind of life I want to.” Websites such as Home Views, which hosts reviews of residential developments, can help identify the right new-build to move to.

The freedom of renting also makes it much easier for an elderly person to move into a care home if their health deteriorates than from a home that they own. Elizabeth Hill’s mother Rosemary, aged 90, moved into Birch grove, a development of rental properties for the over-65s in south-east London. “Once you’ve bought, it’s really difficult to sell,” Hill said. “If Mum bought somewhere and then she had to go into a care home, we would need to sell that property pretty quickly in order for her to afford the care home − so she chose to rent.”

Resources: https://www.telegraph.co.uk/property/renting/baby-boomers-swerving-stamp-duty-freeing-cash/

Newly listed house prices near record highs, Right move finds

2019-06-18T09:13:00.000+08:00

Newly listed house prices near record highs, Right move finds

Resilient property markets in the north of England have helped push up the national average price of a newly marketed property by 0.3pc, according to Rightmove’s latest measure of online asking prices.

Despite Brexit jitters dampening house price growth in the UK over the past year, the average price of a property coming on to the market was £309,348, close to June 2018's record high of £309,439.

Buoyant markets in the north and Midlands are helping to boost average prices due to the “relentless strength of buyer demand”, said Miles Shipside, director at Rightmove. “Buyers in four regions are seeing higher new seller asking prices on average than ever before.”

The regions setting new record highs are the East Midlands, the North West, Wales and Yorkshire & the Humber, where asking prices rose by 0.7pc, 1.2pc, 0.9pc and 0.5pc respectively.

By comparison, London saw monthly average asking prices fall 0.4pc, while Scotland was the worst performer with asking prices down 0.8pc month-on-month.

Mark Manning, director of estate agent Manning Stainton, which operates in Leeds and West Yorkshire, said: “This is certainly not a market without its issues as the continuing political uncertainty remains a concern as we move towards the summer.

“However for now the market in the North seems poised for further growth over the coming months as the sheer weight of buyer demand continues to push prices ever higher across our region. Since the start of the year just over a third of all the properties that we’ve listed have been sold for their asking price or higher and with an average selling price of just over 98pc of the asking price it seems that sellers are still calling the shots.”

Rightmove’s figures are based on asking prices, rather than selling prices, which “are often determined by buyer or estate agent optimism and expectation, not necessarily realism”, said north London estate agent Jeremy Leaf.

The most recent house price index by lender Nationwide showed house prices rose at their slowest pace in three months in May, with annual growth of 0.6pc – slower than the 0.9pc rise in April. It was the sixth consecutive month that the annual pace of growth remained below 1pc.

Separate research by Hometrack, a data consultancy run by property website Zoopla, found there was a distinct north/south divide when it comes to asking prices.

Generally, in the north of England, homes selling for about 3pc under the asking price, while in the south it’s 3pc to 5pc.

Richard Donnell of Zoopla said: “The current housing cycle started almost a decade ago and is unfolding at different speeds, driven by local factors, primarily growth in incomes and employment, and overall levels of affordability.

“Many places in the South have seen house prices go up for some time, so it feels like the cycle’s over. Properties there now take longer to sell, and vendors are having to accept lower offers, so sale prices are generally further below asking prices.”

Resources:https://www.telegraph.co.uk/property/house-prices/newly-listed-house-prices-near-record-highs-rightmove-finds/

Birmingham to be top UK city for private rented sector investment

2019-06-14T16:52:00.001+08:00

Birmingham will be the UK’s top city for attracting private rented sector (PRS) investment over the next five years, according to new data.

Knight Frank’s inaugural Residential Investment report, which looks at the sector as a whole for the first time, surveyed 43 leading investors with a combined £32bn already invested across student accommodation, investment grade PRS and senior living rental.

The respondents identified the cities where they saw the biggest opportunities in each sector over the next five years.

Birmingham is the best opportunity for PRS by quite some margin, according to respondents, driven by regeneration and infrastructure improvement.

Ashley Hudson, managing partner of the Knight Frank commercial office in Birmingham, said: “Our investor survey shows that Birmingham is expected to outperform all other UK cities over the coming five years, with London, Bristol and Leeds closely behind.

“Birmingham presents an incredibly compelling investment opportunity for PRS, with a rapidly growing population, significant infrastructure and transport improvements and a structural undersupply of new-build PRS product.

“The rapid expansion of the residential sector is essential for the continued success of the City’s economy and its ability to attract inward investors. As well as providing fantastic places to work, employers have to ensure there are high quality options to house their employees.”

Stuart Eustace, residential development partner at Knight Frank in Birmingham added: “We are entering into an interesting stage in the market with Birmingham’s first three major PRS schemes now taking in their first tenants – The Forum which will deliver 343 units on Pershore Street, the first phase of Exchange Square totalling 618 units, and the Landsdowne at 207 units on Hagley Road.

“Including these three schemes there are approximately 4500 units either built, under construction or under offer from a Build-to-Rent perspective. At present this represents Birmingham exposure for just under half of the institutional grade investors that we know to be active in the market and the challenge for the remaining funds is to find their first success in the city, while existing funders will be seeking their second acquisition.”

The Knight Frank research also shows that nationally over the next five years the UK PRS sector is expected to leapfrog student accommodation, with the sum of capital invested and committed in the investment-grade PRS rising to more than the total value of the Student Accommodation sector.

The combined value of the sectors in 2025, forecast to be £146bn, means that the sector will start to close in on some of the commercial real estate classes by total asset value, cementing its place as an established mainstream asset class for global investors.

When assessing where investment in the three residential sectors is coming from, the heads of three specialist teams at Knight Frank cited the USA, Canada and the UK as counties from which they have seen the most activity in recent years.

James Mannix, joint head of residential development & investment at Knight Frank, added: “The growth of these sectors is mainly down to investor appetite for diversification, the granularity of occupiers that comes with individual units, demographic and tenure shifts and a housing policy landscape in the UK that is now embracing diversity of tenure.

“While there are significant differences in market drivers for each sector, there are key synergies in construction and operations, making a move across sectors even more appealing for investors.”

Photo: The 259-unit Lionel House private rented sector scheme in Lionel Street, central Birmingham, which has been forward funded by Aberdeen Standard. Early enabling works are already underway, and the 14-storey development is expected to be completed in the summer of 2021.

Resources :http://www.thebusinessdesk.com/westmidlands/news/2030258-birmingham-to-be-top-uk-city-for-private-rented-sector-investment

Peer-to-peer crackdown: investors limited to 10pc of their wealth

2019-06-06T23:55:00.000+08:00

Peer-to-peer crackdown: investors limited to 10pc of their wealth

The City watchdog will ban new investors from investing more than 10pc of their wealth in peer-to-peer (P2P) loans as part of its crackdown on bad practice in the risky sector.

From December, investors will also be required to pass a test to demonstrate they have understood the risks involved.

The failure of Lendy, a high-profile platform, has shone a spotlight onto the fledgeling P2P sector in recent months. It's 20,000 customers have been left facing huge losses after the platform collapsed into administration at the end of May, following widespread late payment by borrowers.

The regulator, the Financial Conduct Authority (FCA), is now looking to restore confidence by forcing platforms to meet higher standards. Firms must make it clear that investors’ cash is at risk and that, unlike savings accounts, their money is not protected by the Financial Services Compensation Scheme (FSCS).

P2P providers will also face restrictions on their marketing campaigns, to prevent unsophisticated investors being lured in by high-interest rates.

Customers have invested huge sums in P2P platforms, which allow individuals to invest directly in small businesses and property projects. Some platforms, such as Lendy, whose investors are now considering legal action, have offered returns of 12pc or higher.

The new rules, which take effect on December 9, will also force platforms to tell investors when a borrower is unlikely to meet their obligations, even if they are yet to technically default.

The FCA warned that in some cases, investors had not been given clear or accurate information by platforms, leading them to make unsuitable financial decisions. Other customers have invested in high-risk projects without understanding that they have little recourse if things go wrong.

It also found that some platforms had failed to disclose their own charges, meaning investors have found it difficult to compare rival firms.

This intervention comes days after one industry expert told Telegraph Money that as many as a dozen platforms would close in the coming years. The FCA has also strengthened the rules on what happens when a platform winds down its business.

Matt Hopkins of BDO, an accountancy firm, said: “Parts of the P2P market have claimed to achieve high returns backed by investments identified as low risk but which are actually highly speculative. That will no longer be tolerated.”

However, Mr. Hopkins expressed doubts about the effectiveness of the 10pc cap for new investors. “This may be a sound principle but will be based on self-certification,” he said, suggesting that investors would be able to game the system.

Resources: https://www.telegraph.co.uk/investing/news/peer-to-peer-crackdown-investors-limited-10pc-wealth

Mortgages worth £9bn approved in April as buyers return to housing market

2019-06-03T16:17:00.000+08:00

Mortgages worth £9bn approved in April as buyers return to the housing market

More money was pumped into the housing market last month than at any point since 2007 as homebuyers stopped waiting around for Brexit and got on with moving house.

Almost £9bn of home purchase mortgages were approved last month as the big high street banks gave the thumbs up to almost 43,000 such loans.

That was the highest value of lending in almost 12 years according to industry group UK Finance, which seasonally adjusts the numbers so trends can be compared month to month.

The number of mortgages was up 6pc on the month and more than 11pc on April 2018.

The average size of those loans was £203,400, the second-highest level on record.

The jump comes after a sharp slowdown in the market that saw transaction numbers fall and price growth slump.

“The latest jump in mortgage lending might reflect the Brexit delay. Some buyers who were sitting on the fence earlier in the year may have committed to purchasing after the near-term risk of a no-deal Brexit had passed in March – boosting approvals in April,” said Hansen Lu at Capital Economics.

However, he said the monthly data can be volatile and did not expect the market to surge higher in the coming months.

Analysts said caution on the part of sellers meant prices were unlikely to slide regardless.

“A shortage of houses on the market will likely offer some support to prices,” said Howard Archer, chief economic adviser to the EY Item Club.

“We believe with Brexit most likely be delayed until 31 October and the domestic UK political situation volatile, prolonged uncertainty will weigh down on the economy and hamper the housing market. Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes. Consequently, we suspect house prices will rise only around 1pc over the year.”

Remortgaging also picked up with more than 31,000 homeowners shopping around for a new loan in the month - the highest level since November 2017.

At the same time, consumer borrowing showed signs of stabilising.

Credit card lending rose by 4.1pc on the year to April, down from 4.3pc in March and from 2016 the peak of 6.6pc.

Overall consumer credit, which includes loans and overdrafts, has been growing at about 3.8pc steadily over the past 12 months, indicating previous worries about a bubble have now eased.

Resources:https://www.telegraph.co.uk/business/2019/05/28/mortgages-worth-9bn-approved-april-buyers-return-housing-market/

Landlord exodus: half threaten to quit over tenant eviction ban

2019-05-30T11:34:00.002+08:00

Landlord exodus: half threaten to quit over tenant eviction ban

Adam Williams

23 MAY 2019 • 6:15AM

The Government has been warned that the supply of rented homes could shrink if it presses ahead with plans to ban landlords from evicting tenants without due reason.

The Residential Landlords Association (RLA), an industry pressure group, said it has been inundated with letters from buy-to-let landlords who are angry at the proposals to end section 21 repossession rules.

Almost 6,500 landlords replied to its most recent survey, the biggest response the trade body has ever received. Its data suggests that almost half of landlords (46pc) plan to withdraw from the sector, either in part or entirely, because of the proposed ban.

The RLA has warned that these changes, along with the introduction of a much stricter tax regime, will lead to a reduction in the number of properties available to rent.

The Royal Institution of Chartered Surveyors, another trade body, has previously warned that rents could increase by 3pc each year over the next five years because of the new rules.

Telegraph Readers | Open-ended tenancies

Telegraph readers shared their thoughts on the news that Theresa May will bring an end to “no fault” evictions which give tenants as little as eight weeks’ notice after their fixed term contract has come to an end meaning that landlords will no longer be able to evict people at short notice without good reason.

@EdmundCowley
“The law should recognise two groups of landlords and treat them differently. The person renting their primary home while away on business assignments or second home pension investment should be treated differently in law than the professional landlord with multiple properties.

“Just like in business the struggling micro-business or start-up gets hammered with burdensome regulations designed with medium and large business in mind. It is very unfair and an anchor on the economy.”

@PatrickBrown
“How can they not see that if you make life difficult for landlords they will stop renting unless tenants sign a lease with a termination date.

“Meanwhile rents will increase to cover the additional legal costs of drawing up and enforcing leases.”

@CharlesTurner
“One of the arguments saying there will be less houses to rent doesn’t look at the other part of the equation. If more landlords sell, prices will drop and more young people will buy. This will change the balance of buyers and renters but it won’t reduce or increase homeliness.

“There is also a good tenant vs. bad tenant argument. If a tenant pays their rent on time and look after the property, should they not have more protection against unexpected eviction than a tenant that trashes the house and doesn’t pay the rent?”

@AnthonyWalker
“This is potentially a very dangerous move, as it will undoubtedly put up rent and deter landlords from renting out property without carrying out extensive research on their applicants.

“Certainly it is something that needs looking at as there are a number of individuals who do not respect the property, nor do they pay their dues. The vast majority live as good tenants. There are a few landlords who need to be watched and fined if they misuse their privileges.”

@andrewtownshend

“I have 16 rental properties, don’t know whether that makes me a small or a big landlord, over the yrs I’ve had my fair share of bad tenants that I’ve been pleased to see the back of, but we have learned from our previous mistakes, no DSS, no under 25s, has worked for me. These days I have good tenants, who stay a long time, and I have no wish to evict any of them.”

@EHatfield

“Things have changed far too much in favour of the tenants. You can’t legislate people into being decent; there will always be rotten landlords and rotten tenants but the latest changes seem much too one-sided.”

The ongoing crackdown on buy-to-let is also causing landlords to postpone other crucial decisions about their properties, the RLA warned. Its research said 40pc of investors were adopting a "wait and see" approach before pouring any more cash into the sector.

The Government has promised to bolster the rules under section 8, which allow landlords to repossess properties in the event of rent arrears or anti-social behaviour. But the RLA argued that this process was too slow, given landlords must apply to the court before action can be taken.

It takes around five months to go from application to repossession using section 8, it said.

There have been proposals to introduce a special housing court, which would allow all housing disputes to be heard by a single body. The RLA said 91pc of landlords would support the establishment of such a court.

David Smith of the RLA said: “With the demand for private rented housing showing no signs of slowing down it is vital that landlords are confident that they can quickly and easily get back their property in legitimate circumstances.

“Whilst the system should clearly be fair to tenants, it needs also to support and encourage good landlords. This needs to be underpinned by a court system that is fit for purpose and properly resourced. At present it is neither.”

Resources: https://www.telegraph.co.uk/investing/buy-to-let/landlord-exodus-half-threaten-quit-tenant-eviction-ban/

Why the sluggish market for London's priciest homes will eventually bounce back

2019-05-29T10:35:00.000+08:00

Why the sluggish market for London's priciest homes will eventually bounce back

By Annie White

19 MARCH 2019 • 7:00AM

Mayfair, lined with black cabs and supercars, is slowly being pedestrianised to make the exclusive enclave a place where people walk. Some boutique apartments even come with lifetime Zipcar membership rather than underground parking spaces.

There’s more change afoot: the residential conversion of the former US naval headquarters into one of the most prestigious addresses in the world is nearing completion.

Conversely, just a few streets away, lower-income tenants (by Mayfair standards) can rent a home for £450 per week in a former bank through property management firm Lowe Guardians. Meanwhile, the 7,000 sq ft penthouse at the top of the Centre point building has been valued at more than £50 million, a price usually associated with Knightsbridge rather than the once-grubby Tottenham Court Road.

These are not changes in isolation. They are reflective of luxury London reinventing itself in the midst of a prolonged period of political, economic and fiscal disruption. Despite the horror stories, there’s a resilience about prime central London (PCL). Last week, estate agents Knight Frank said that London would remain the leading global wealth centre whatever the Brexit outcome, and that it had returned to the top spot in its city wealth index, overtaking New York.

The most expensive streets of London, a collection of historic urban estates and listed architecture, have an unwavering appeal that spans centuries. Yet its style, interior design, culture, pricing and geographic footprint all adapt to survive market pressures.

A decade of disruption

“No sector in the UK has suffered such interference as the PCL property market” says Chris Myers, of the law firm Forsters. “It has been the political football of the UK industry.” Data from JLL show the property price roller coaster tracking fiscal and economic upheaval over the past decade.

In the year to December 2008, values plummeted 18.3 per cent. This period included the government rescue of the Royal Bank of Scotland, HBOS and Lloyds TSB; the collapse of Lehman Brothers; and the bailouts of Fannie Mae and Freddie Mac in the United States.

However, even the added uncertainty of a general election in May 2010 did not dampen the ferocity of the recovery, as international wealth poured into PCL, the safe haven of global real estate. With Prime Minister Tony Blair’s non-dom visas available, London was open for business and in the 12 months to June 2010, values rebounded by 25.2 per cent.

The second half of the cycle was characterised by a slowdown, exacerbated by then-chancellor George Osborne’s stamp duty hike on homes bought for more than £1 million and Government-led hostility to overseas buyers.

“Prices peaked in June 2014 and the market was at the point of overheating,” says Lucian Cook, head of residential research at Savills. He cites inheritance tax and punitive changes to the non-dom buying system as part of a portfolio of tax changes that deterred the overseas investor, followed by the uncertainty of Brexit. “The price falls were in line with the recession of the early Nineties and the credit crunch of 2008, but over a longer period.” Since 2014, prices in PCL have fallen by around 20 per cent.

Getting agile

The luxury property market in central London is hugely volatile, driven by sentiment and the world’s elite competing for the best trophy pad. However, Cook believes there are now other factors putting the brakes on another dramatic recovery. “This time it’s different,” he argues, pointing to the prospect of a Corbyn government at the next election. “London has matured as a global city and the tax environment is less accommodating than it was 10 years ago, so price appreciation will be calmer.”

However, there is a platform for recovery. Data from Savills show the level of transactions was more robust than expected last year: in 2018, there was a 10 per cent increase in the number of properties worth more than £5 million sold in the capital, compared with the previous year.

“With disruption comes opportunity,” says Guy Bradshaw of Sothebys International Realty. “Developers have cut prices and due to the currency play, those buying through the US dollar are getting a double discount.” He claims to have a lot of interest from North American buyers looking for homes worth around £5 million.

This means the vultures are circling: opportunistic funds, such as private equity players, are now buying plots from bust developers. “I have two funds which have $200 million (£152 million) to spend here,” says Becky Fatemi, of Rokstone, a luxury estate agency.

“Institutional funds, which have kept their powder dry, have entered the market getting fairly sizeable discounts,” adds Lee Layton, of Cushman & Wakefield, a property consultancy. They are buying what he describes as “broken portfolios”, taking some homes but not the whole building, and developing them for either sale or rent depending on the market at the time of completion. “PCL is not stuffy. It’s agile,” he adds.

Global appeal

The global nature of PCL’s appeal has helped to stop the deep price correction becoming a crash. “We still have a big share of the world’s market, and demand simply shifts from country to country,” says Myers, of Fosters. The Singaporeans were big players in the market until they faced a stiffening of domestic debt ratio rules, he explains. When Thai buyers dropped off due to political instability at home, the Indians entered. There was an influx of Turkish buyers and Russians have been and gone. The current story is mainland China.

Nearly two thirds of PCL properties were purchased by overseas buyers in the second half of last year, the highest level since 2012, according to Hamptons International. “This activity is fundamentally being driven by the currency shift; those looking to invest from abroad are getting better deals now thanks to a weaker pound,” says John Slade, of Duff & Phelps.

“Despite the current political and economic climate, London in the long term is still an attractive place to live and work.” Wealthy British families are also back in the luxury market, owing to price falls, adds Fatemi, such as in Clapham’s Nightingale Triangle.

The techie not the hedgie

The changing profile of the buyer is also shifting what London priciest homes looks like. The techie has now replaced the hedge funder, and they are after less bling. “They don’t want the gratuitous over-adornment so often associated with central London, rather a pared-back luxury,” says interior designer Katie Earl, of No 12 Studio. Ed O’Donnell, a founder of interior design firm Angel O’Donnell, agrees: “The new stripped-back luxury is a focus on craftsmanship.”

The best addresses in town

The boundary where PCL begins and ends has become blurred. Transaction levels in Marylebone, for example, have dwarfed Mayfair over the past 12 months: recent data from LonRes show sales there were up 40 per cent.

Savills’ Jonathan Hewlett maintains there is an ever-captive audience for the very best streets. He cites Eaton Square in Belgravia as the number one spot, along with Avenue Road in St John’s Wood, and the Candy brothers’ One Hyde Park in Knightsbridge.

Pent-up demand

Knight Frank reported that, despite a recent fall in sales of high-end homes, as people sit on their hands because of the uncertainty of Brexit negotiations, the number of prospective buyers continues to climb.

As soon as there is any kind of certainty to do with Brexit, activity will increase due to pent-up demand, according to the agent. Whatever instability is thrown at this market, in time it will bounce back.

Resources: https://www.telegraph.co.uk/property/luxury/sluggish-market-londons-priciest-homes-will-eventually-bounce/

When will you be mortgage free? Here's how much you should have paid off in your 30s, 40s and 50s

2019-05-22T15:57:00.000+08:00

When will you be mortgage free? Here's how much you should have paid off in your 30s, 40s and 50s

Adam Williams

15 MAY 2019 • 7:04AM

Are you keeping up with the Joneses? Not just in terms of the car on your drive or the clothes on your back, but the amount of your home you own? Paying off a mortgage as early as possible is a common ambition among homeowners.

Reaching mortgage-free status is a major step on the way to a financially secure retirement, but figures indicate that this dream is at risk because many more people are carrying mountains of housing debt later in life.

Analysis of data from the Financial Conduct Authority, the City watchdog, by Royal London, the insurer, shows that homeowners are increasingly struggling to pay off huge mortgage loans. The situation has worsened since the financial crisis, despite owners enjoying rock‑bottom interest rates for the past decade.

Much of keeping up with the Joneses involves knowing what the Joneses do. So how much of your property should you own at each stage of your life?

Royal London found that those aged 25 and under typically owned a 10pc-15pc stake in their property, with this share growing to between 15pc and 25pc after the age of 26.

Once homeowners reach their 30s they will typically own more than a quarter of their property, rising to half as they enter their 40s. It is not until the age of 56 that most people start to achieve mortgage freedom, as this is when the typical amount outstanding falls into the range 0pc-30pc. The picture has become bleaker since 2007, when this data was first collected: the equivalent age then was 51.

The the average age of a first-time buyer has also risen, Royal London said, from 28 in 2007 to 34 today. Buying later usually means paying off the mortgage later.

Jonathan Harris of Anderson Harris, a mortgage broker, said: “Many homeowners are taking mortgages into later life. Some need a mortgage as they have released cash to spend on school fees or to help offspring on to the housing ladder. Others are taking advantage of low mortgage rates or more flexible deals that allow older borrowers to continue with home loans well into retirement.”

Though it can help to have the cash, the cost of taking a mortgage into later life can be substantial. Interest rates tend to get progressively lower as homeowners build up more equity in their properties, because lenders consider them a safer bet. But people who are still borrowing large sums face much higher rates.

Typically, customers borrowing less than 75pc of the value of their home will be offered lower rates than those above this level, with the very lowest rates being enjoyed by homeowners who borrow 60pc or less.

The lowest rate currently available to homeowners with a 10pc deposit is 1.78pc, but a customer who has a 25pc stake in their property would be able to achieve a rate as low as 1.49pc. This would result in monthly payments of £683 on a loan of £228,147, the average house price, considerably less than the £848 the other borrower would pay.

House price growth has often helped to improve homeowners’ financial situation. However, prices are now stalling in many areas, which could pose problems.

Becky O’Connor of Royal London said: “For those who already own their home, house price inflation is a windfall, giving them a bigger deposit when they remortgage and enabling them to access lower mortgage rates.

“But those still waiting to buy a home while prices are rising must stretch themselves and then face the likelihood of being stuck paying higher rates for longer if house price growth remains relatively flat.”

Mrs O’Connor said that, rather than relying on house price growth, making regular overpayments on the mortgage was the best way to pay it off sooner. Small overpayments today can shave years off, she said. Mr Harris suggested that customers should try to reduce their mortgage term each time they remortgaged

“With interest rates still very low, when you come to remortgage you might be able to switch to a slightly shorter term, assuming you can still afford it, in order to be mortgage-free sooner. Even a year off the mortgage will make a difference,” he said.

He said that, while it might be tempting to release cash from a property when remortgaging, this should be avoided if possible. “If you increase your borrowing to pay for an extension or to buy a new car, it can add tens of thousands to the overall cost,” he said. “Be disciplined and stick to remortgaging at the same level.”

Such is the perilous state of many older people’s finances that a new generation of mortgages has been launched for homeowners who are forced to take their loans into retirement.

Retirement interest-only (“Rio”) deals let borrowers take out loans with no end date, meaning they can potentially be paying them off years or even decades into their retirement. But given the cost of moving home, this may be cheaper than downsizing.

Mr Harris said: “The high cost of stamp duty is making it harder to move, with many choosing to stay put and extend rather than spend tens of thousands of pounds on the tax. This is further clogging up the housing market as a whole, as there are fewer transactions and less choice of property for sale for those who do wish to move.”

Resources:
https://www.telegraph.co.uk/personal-banking/mortgages/will-mortgage-free-much-should-have-paid-30s-40s-50s/?WT.mc_id=tmg_share_em

RB Care Homes' Butterhill Care Home Celebrates Easter with Families, Shares Positive Energy

2019-05-10T09:52:00.001+08:00

RB Care Homes' Butterhill Care Home Celebrates Easter with Families, Shares Positive Energy

NEWS PROVIDED BY

RB Care Homes

Apr 29, 2019, 11:04 ET

STAFFORD, England, April 29, 2019,/PRNewswire/ -- On April 21^st 2019, Easter Sunday was celebrated in style at Butterhill Care Home, located in Staffordshire, with an array of egg-cellent activities! Families and friends were invited to take part in a Mad Hatter Tea Party that saw the residents, staff and guests enjoy a rather exciting afternoon. Butterhill was transformed into its own quirky wonderland for Easter, complete with Alice in Wonderland cut-outs, Easter-themed games, arts and crafts and of course, plenty of chocolate.

"It's always extra special when we plan activities like this. You can feel the positive energy and the residents especially enjoy trying something new and spending time with their families. It's really amazing to be a part of", said one member of staff.

The day was filled with frivolity and laughter when residents were let loose to create their own crazy Easter bonnets fit for a mad tea party. The crazier they were, the better! Brimming with feathers, tinsel, flowers, fluffy chicks and more, the wild and wonderful bonnets certainly turned heads and brightened the room.

Breaks for finger sandwiches and Easter cakes were well deserved and enjoyed with a cup of tea during cherished visits from the resident's family and friends. But the fun wasn't over just yet; the classic fairground game of 'hook-a-duck' was up next and everyone's competitive side was unleashed. Later in the day more arts and crafts were created, including Easter greeting cards, that were then proudly displayed upon the wall.

Even the staff got into the spirit of the day with floppy bunny ears, face paints and matching costumes and to top off an already 'hopping' good day, a raffle was held that saw hampers full of treats and cuddly toys handed out to the lucky winners which in turn raised an amazing £215.

The raffle money will be well spent on a potting shed placed in the grounds of Butterhill for residents to spend much needed time outside. The introduction of the shed will see the residents out in the fresh air, planting and tending to their own home-grown tomatoes.

What was once a deteriorating care home, Butterhill was acquired and overhauled by RB Care Homes, into the fantastically run home it is today. Rated Good by the CQC, RB Care Homes are proud to see that Butterhill has blossomed into such a well-respected and sought-after home.

Raqia Bibi, Chief Operations Officer of RB Care Homes, said "it is always a pleasure to be part of a significant turnaround such as Butterhill. When we hear about the ongoing success of events such as the Easter activities, it makes what we do worthwhile."

Butterhill specialises in care for Dementia, old age ailments, palliative care and mental health issues. Staff endeavour to make their guests feel at home and encourage guests to decorate their rooms. Butterhill is proud of their stunning countryside location and is surrounded by lush green gardens. It's a beautiful, well-run home with a capacity for 28 residents have well-trained staff and are dedicated to providing the best care to its residents and families.

Resources: https://www.prnewswire.com/news-releases/rb-care-homes-butterhill-care-home-celebrates-easter-with-families-shares-positive-energy-30083979

Who wouldn't want to live in a £3 million retirement home?

2019-04-30T12:35:00.001+08:00

Would you like to live in a slick Chelsea flat when you retire, with interiors decked out by the team who did parts of the Langham Hotel? It's got Bugatti stairlifts, NASA technology to prevent falls, a Speakeasy bar, a restaurant that serves £250 pots of caviar, and a spa complete with a salt sauna.

Me too... I'm counting down the days. But Auriens, the a developer has had trouble shifting these flats – not because of the five-star amenities – but due to the fact that the sale prices started from £3 million. It has now put all of the properties up for rent, including those that had been reserved to buy. Rents start from £310,000 a year for a one-bedroom apartment and reach the stratosphere for penthouses.

You may argue that it's not surprising there isn't a big enough market for retirement properties that start at £3 million. But that's not strictly true; it's more representative of what's going on at the top of the property market.

There is huge demand for retirement homes in London at every price point, and there are few places for downsizers to move. It's a problem of supply: City Hall has a target of building 4,000 retirement homes a year, but the real total is nowhere near that. That's compounded by the fact that the number of retiree households in the capital is due to increase to one million by 2030, meaning there will be a demand for 69,000 more later living homes over the next 12 years.

But this is also an issue with the market: it has seized up, particularly in expensive family homes in London and the South East, thanks to a cocktail of political and economic uncertainty and the continuing impact of the stamp duty crunch. This effects exactly the kind of people who need to sell up to move into one of these Chelsea pads. These potential sellers have a huge amount of room going spare: according to analysis by Dataloft, £62 billion in equity could be freed up across London if retirees downsized from their mortgage-free family homes with underused space that are occupied by just one or two people

This is an extreme example, but one that has echoes across the property market. The downsizer conundrum is not going to be solved any time soon; we'll just have to dream of those caviar and booze-soaked later years...