LinK-UK

 By Shane Croucher   October 27, 2016 09:26 BST

URL: http://www.ibtimes.co.uk/what-property-industry-wants-when-uk-triggers-article-50-1588510

We asked those in the residential property sector what they want from Brexit deal. Here’s what they said.

Brexit negotiations won’t begin until the UK government triggers Article 50 the rules for exit of the Lisbon Treaty, which kickstarts the formal process to leave the European Union. That will happen before March 2017, said Prime Minister Theresa May.

But when that final deal comes, what does the residential property sector hope to see in there? IBTimes UK asked a number of different players in the sector what they want from the Brexit deal. Here’s what they said.

Paul Smith, chief executive of haart

We need a quick, clean break from the EU, as opposed to drawn-out negotiations. Brexit may or may not mean Brexit, but uncertainty around negotiations certainly does mean uncertainty in the residential property market. This is particularly true for housebuilders who are currently sitting on land, holding off developing until they have more clarity on the outcomes. Clarity on the government’s position and guarantees of further investment in housebuilding would stop developers pressing the pause button, as well as provide some relief for Britons worried about whether or not to buy or sell a house.

Fortunately, the residential property market has very few ties to the European Union, and there is very high domestic demand for new homes, so we are not too reliant on overseas buyers. However, greater autonomy would definitely be welcome, and the Mortgage Credit Directive is a good example of unnecessary European bureaucracy that Britain simply does not need. We shouldn’t be afraid of Brexit at all – mild economic turbulence is to be expected, but in the long-run our new found freedoms and a reduction in red tape should pay dividends.

Sadly it seems that some members of the government are determined to keep us in the single market, which would effectively mean being a member of the EU and obliged to follow their regulations, without having any say whatsoever in determining the rules. People voted to be free of the EU, so a halfway house deal that would see many Brexit promises reversed must be avoided. The market is robust, but stagnation will ensue unless a clear position is quickly agreed. It’s time for Theresa May to bang some heads together and deliver the Brexit the nation voted for.

Nick Davies, head of residential development at Stirling Ackroyd

The shortage of homes compared to the number of aspirational buyers should ensure the residential property market will come through the Brexit process relatively unscathed. However, the current uncertainty is reducing the incentive for people to move home, with many potential buyers and sellers waiting to see what happens with negotiations before moving. Therefore, a relatively quick negotiation process would be beneficial to the residential market.

As the UK isn’t building anywhere near enough homes, the housebuilding industry should also be supported during this period of negotiation, with the Autumn Statement and 2017 budget proving as ideal opportunities to extend investment in housebuilding. The country can’t afford for the delivery of new homes to slow any further. If it does, house price rises will pick up pace, ensuring it will be even harder for first-time buyers’ to get their first foot on the ladder.

In London, it’s vital that the strengths of the City and Silicon Roundabout are both preserved and protected. Technology and finance are two key pillars of the UK economy, which will drive the country’s future growth. The residential property market relies heavily on their services, with London’s market also relying on professionals in these sectors buying homes here, and this has helped to drive the regeneration of much of East London with its close proximity to the City. Highly skilled workers must also retain easy access to the UK to enable them to continue to live, work and buy here.

London’s market also depends on its place as one of the world’s greatest cities, allowing it to draw in people and investment from across the globe. The current decline in the currency is likely to encourage international buyers and capital, with homes in London now 7% cheaper year-on-year for European buyers and 8% cheaper for Americans. The negotiations should not hinder investment in London or place it’s status at risk.

Andrew Smith, chief investment officer of Hearthstone Investments

As a fund manager, Hearthstone focuses on the link between economic growth and property investment performance, so we are looking for a deal that offers the best prospects for economic growth. We favour a “soft” Brexit, retaining access to the single market and without draconian restrictions on the movement of skilled workers and students.

We see this as the best way to secure the future of the UK’s financial and service sectors, particularly in London and the south-east, but also the regional economies where major employers are dependent on successful international trade. The government will also need to be clearer on its regional development funding policy as EU aid ends, and it’s far from clear where such money would come from.

That said, we think residential property has less to fear from a ‘hard’ Brexit than commercial real estate. It tends to be more resilient in times of instability and uncertainty: demand depends on the number of households, which isn’t affected much by changes in economic conditions. Residential rents are generally a good inflation hedge.

Whatever the eventual deal, the UK has a housing supply shortage. As investors generally want new stock, any restrictions on the supply of skilled construction workers could make a bad problem worse. While existing investors might benefit if undersupply pushed prices higher, it would limit much-needed new institutional investment in the sector.

Giorgio Buttironi, Policy and Public Affairs Officer at the National Federation of Builders

With the Housing Standards Review, the UK already builds excellent quality homes. It doesn’t necessarily need to match one-size-fits-all EU regulations to do that. For example, homes in Sweden will have different energy efficiency requirements from those in Cyprus.

Brexit should also mean appropriate policy to deliver homes. Once again a one-size-fits-all approach to procurement doesn’t deliver the appropriate output of housing supply. For example, a mandatory upper threshold on government finance for housing projects impacts both financing and procurement.

With an ongoing skills crisis and impending retirements, the government is perfectly placed to tackle the Brexit shortfall by ensuring an appropriate training and upskilling programme is in place. SMEs, who employ workers within a 19-mile radius of their head office, are already positioned to achieve this target.

Steve Turner, spokesman for the Home Builders Federation

I think our main asks are labour – we simply have to maintain access to skilled labour if we are to continue to increase output as required. And stability. We need as stable an economy, and political and policy environment, as possible so that demand remains and the industry can plan ahead.

Chris Norris, head of policy, public affairs and research at the National Landlords Association

I don’t think it would be possible to suggest that the UK’s residential sector has one coherent wish-list from the UK’s exit from the European Union. Brexit is very unlikely to change the stability of residential property as an asset class in the long-term, as most investment originates domestically and is fairly small-scale. Larger investment will likely slow, as funds evaluate the likely impacts, but provided that demand remains strong it will remain viable.

Depending on the eventual decisions concerning the movement of people, local markets which depend on migrant labour may suffer in terms of reduced demand – but it is far too early to say how acute or widespread this could be, if it happens at all. The biggest danger for private landlords in the UK is likely to be that while the British government obsesses over how to extricate the country from the European Union it fails to recognise the devastating impact some of its recent domestic policies are having on the housing market.

David Smith, policy director for the Residential Landlords Association

With the government introducing criminal sanctions from December for those found to be renting to tenants without the right to reside in the UK, landlords need certainty about the status of EU nationals currently living in their properties.

Until a firm assurance can be given that such tenants will continue to have the right to rent when Brexit begins in 2019, many landlords will likely play it safe and conclude that renting to those from elsewhere in the EU is too much of a risk to take.

UK house prices:pace of growth slows, but property prices are still rising after Brexit vote

Source: Homes&Property

By LIZZIE RIVERA

13 September 2016

URL: http://www.homesandproperty.co.uk/property-news/buying/uk-house-prices-pace-of-growth-slows-but-property-prices-are-still-rising-after-brexit-vote-a104506.html

The housing market is showing early signs of resilience following the Brexit vote, new official figures show.

The Office for National Statistics’ house price index shows a moderation in house price growth from 9.7 per cent in the year to June, to 8.3 per cent in the year to July.

House prices rose by 0.4 per cent between June and July, although many property sales recorded in the ONS data would have been well under way before the EU referendum on 23 June.

At £217,000, the average price of a UK home in July is £17,000 higher than a year ago.

In London, average prices rose by 12.3 per cent in the last 12 months to £485,000 – more than double the UK average.

Overall, the figures reflect that house price growth is slowing. However, it’s too early to tell whether this is directly related to the referendum or because of other factors, including an annual seasonal slowdown and reduced demand from buy-to-let landlords following stamp duty increases this year.

After several years of double-digit rises, a cooling down in house price growth is seen by property experts as a natural correction of the market because such large increases have weakened affordability.

“Our own expectation is that the UK housing market will cool, not crash. In our main scenario, average UK house price growth is projected to decelerate to around five per cent in 2016 and around one per cent in 2017,” says Thomas Fisher, economist at PwC.

The volume of lending approvals for house purchases fell by 5.1 per cent in July 2016 compared to the previous month, continuing a downward trend since the start of the year.

“Today’s data from the ONS shows a moderation in house price growth. This suggests that market demand remained relatively resilient after the Brexit vote, despite some slowdown in mortgage lending,” says Fisher.

The state of the UK housing market in five charts

By: Tom Ough

2 SEPTEMBER 2016 • 6:00AM

URL: http://www.telegraph.co.uk/property/house-prices/the-state-of-the-uk-housing-market-in-five-charts/

So how’s the UK housing market doing? Still in crisis, it would seem. Even the Brexit vote has not arrested property’s steady rise in value: according to Nationwide’s figures, asking prices went up 0.6pc in August. As an increase in demand and a lacklustre level of supply drives up the value of the nation’s housing, the demographics of home ownership have changed. While older people are more likely to own a home outright than they were 25 years ago, younger people have to wait much longer than their elders did to buy their first house.

These problems are exacerbated by a chronic shortage of construction which shows little sign of being solved.

Prices

They are still rising, and fast. The average UK house price was £214,000 in June this year, says the Office for National Statistics, which is £24,000 more than it was at the pre-economic downturn peak in September 2007. Even nervousness over Brexit didn’t dent the onward march of house prices: annual growth increased to 5.6pc in August from 5.2pc in July. This is nothing new: over the last decade or so, the average cost of a house has increased 50pc, according to figures from the ONS.

Real wage comparison

The rise in house prices is important, but what really matters is its comparison with wages. According to a report by the Trades Union Congress, real wages in the UK have fallen 10.4pc in the years following the financial crisis, a decline matched in the advanced Western economies only by Greece. This has exacerbated the divergence between real wages and house prices, which between 1989 and 1995 was shrinking. Since then, the trend has reversed. By early 2015, the average price of a house was five times the average annual wage. This is quite some leap from 1997, where a house cost little more than twice the average salary.

As Full Fact has observed, the gulf is widening with particular alacrity in London, where the ratio has increased from 3.7 to nine times average incomes.

Ageing homeowners

In 1991, more 25-to-34-year-olds owned a house than not. Less than 25 years later, the rate of home ownership in the age group had fallen to 35.8pc — as houses become more expensive, would-be buyers have to wait longer to save up the money.

Conversely, home ownership has been rising steadily among those aged 65 or more. In 1981, half of the 65-74 age group were home owners. By 2013/14, that figure was 78.6pc. Construction

Construction

A cross-party Lords committee said in July that the UK should be building 300,000 new houses a year, which is 50pc more than the Government’s target of 200,000. The supply of housing, however, falls further behind demand every year, with little sign of the disparity being arrested.

Burdensome planning regulations have been cited along with Nimbyism; Theresa May is interested in giving homeowners cash to quieten their objections to local building work.

To arrest the crisis, her Government must find a way of addressing the gulf left by the decline of local authorities’ house building. In 1969-70, 135,700 homes were built by local authorities; such was the decline in state involvement in construction that councils only built 60 homes in 2001-02, with little increase since.

It will take a lot of money to bump house building up to the official target, let alone the rate recommended by the Lords. The number of houses built in 2014-15 was about 150,000, a small rise on the year before but a far cry from the 380,00-odd houses constructed in 1979-80.

The rise of renters

Talk of ‘Generation Rent’ is accurate insofar as younger people are much more likely to rent than they were even a few years ago: ONS figures say that more than a fifth of people aged between 36 and 40 lived in private rented accommodation in 2014, compared with 12.6pc in 2008, according to the ONS. It doesn’t tell the full story, though: driven largely by older age groups, the overall share of people who own their homes outright has increased from 23.7pc in 1986 to 31.2pc in 2014. This can in part be explained by comparative fall in rates of council home tenancy. While in 1986, 27pc of people in the UK lived in a council home, that figure had tumbled to 9pc by 2014.

House prices will rise by 3/3% annually

Source: THE WEEK 8 SEP, 2016

URL: http://www.theweek.co.uk/house-prices/61987/average-house-rental-prices-reached-all-time-high-in-july

House prices will rise by 3.3 per cent a year for the next five years, according to the Royal Institute of Chartered Surveyors (Rics), which says conditions in the market have “settled down” after the uncertainty of the Brexit vote. Rics also says the number of properties being bought and sold in the UK dropped sharply after the EU referendum but has now stabilised, with confidence returning after the Bank of England’s economic interventions.

There is still a sharp division between London and the rest of the UK, however. For the sixth month running, more surveyors said prices were falling in the capital than said they were rising. Rics predicts that the London market will stay flat for the next 12 months.

The monthly report is one of the few that tries to predict the housing market. In a survey of its members, Rics said a higher proportion expect sales to rise over the next three months than have done since January.

Simon Rubinsohn, chief economist at Rics, was optimistic about the ‘Brexit effect’. He said: “There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum. “Buyer enquiries did dip again in August but only modestly, and more significantly, sales expectations are beginning to edge upwards once again. It is likely the swift response from the Bank of England has played a role in helping to support confidence.”

At the start of the year, the group was anticipating four per cent annual growth for five years. That prediction was “before the UK voted to ditch its EU membership”, notes Sky News – though it was made with the referendum on the horizon.  Brian Murphy of the Mortgage Advice Bureau told the BBC that the new data from Rics was “in line” with other recent reports.

Yesterday Halifax said it believes the rate of increase in house prices is tailing off, prompting some commentators to announce that the Brexit vote has “chilled” the market. But Murphy says the Halifax and Rics data support a stable picture. He told the BBC: “This is in line with other data released from lenders such as the Halifax, which supports the same point of view that after a deep intake of breath in June and allowing for the traditionally quieter summer hiatus, the overall market picture for most of the UK is stable, with the continued lack of supply being the underlying factor which is likely to underpin the market in the months to come.”

Average house rental prices ‘reached all-time high in July

Source: THE WEEK 9 SEP, 2016

URL: http://www.theweek.co.uk/house-prices/61987/average-house-rental-prices-reached-all-timehigh-in-july

Rent in England and Wales was £846, despite EU vote

The average cost of renting a home in England and Wales rose to £846 a month in July, according to estate agents Your Move – an all-time record high. The figure marks an increase of 5.2 per cent on the same month last year. The biggest regional rise is in south-east England, where rents were up 15 per cent, reaching an average of £924 per month.

According to The Guardian, the increase in the south-east was driven by people moving out of London to escape the capital’s high rents. The news is a surprise because a rush on landlords snapping up buy-to-let properties before the introduction of new stamp duty rates in April was expected to lead to lower prices.

Your Move also asked landlords about the Brexit vote. It says 72 per cent said they were equally likely, or more likely, to buy more properties for rental after the UK leaves the European Union.

Source: Property Investor Today

Date: 07 September 2016

By Raj Debperty 

URL: https://www.propertyinvestortoday.co.uk/breaking-news/2016/9/uk-property-market-looks-ripe-for-investment

UK property market looks ripe for investment

They say no man is an island, however the UK is – and there is only so much land available, says Raj Deb, CEO and founder of Seed Property Consultants, who explores current industry trends and shares his thoughts on the main considerations for property investors and what the housing sector will look like in ten years time.

The UK is currently in the depths of a housing crisis, yet the opportunities abound for the smart investor. Significant population growth generated by increasing birth rates, immigration,low wages,lack of government investment, limited space and most recently Brexit, have all had a part to play. However, despite the current picture, house prices are still anticipated to rise, albeit at a slightly lower rate due to Brexit.

Key industry considerations: In the current climate

As obvious as it may sound, the key factors currently faced by the property sector can typically be split into two main categories: (1) more immediate and (2) longer term.

More immediate considerations currently shaping the industry include:

+ Lack of available space

Greenbelt policies, local pressure groups and environmental issues often prevent land from being developed where it’s most needed, this leads to a squeezing of opportunity for housing developments.

+ Population trends

More people with the same space! Increasing population size is only adding to the problem. Population is impacted by a number of factors. Birth/death ratesandimproved medical science has resulted in more births and longer life spans. Immigration is a sub-set, not only are adult numbers increasing, but the emergence of affluence and safe havens has alsomeant births are increasing too.

+ Housing shortage

Research shows that the UK needs a minimum of 240,000 homes built per year in order to meet demand. In 2014, less than 120,000 properties were built and lack of investment by successive governments has made the problem worse. Another more recent social factor is the rise ofmore single occupancy households. Remaining single for longer is at one end of the spectrumwhile divorced singletons are at the other. This has resulted in occupancy density levelsand numbers of available dwellings decreasing.

+ Low wages

Since 2008, when the most recent recession hit, wages have remained low, even decreasing for the vast majority of workers.The lack of disposable income has meant the practice of getting a mortgage is not as popular as it once was.In fact, what we are now seeing, is a move away from Thatcherism’s ‘buy your own house’ edict towards the more European ‘rent first and buy later in life’ outlook.

+ Brexit ripple effect

The shock waves from this unexpected political bombshell are still reverberating and with talk of the process of leaving the EU not starting until 2019, this remains a relative unknown.However, in or out of the EU, Britain still undoubtedly remains an attractive country in which to live.

Key industry considerations: For the next decade

+ Green belt land and laws

As space runs out,it’s hardly surprising to hear there are calls on all sides for current greenbelt principles to be re-evaluated.Some want stronger protections to help meet the challenges of climate change and food security. While others question how areas of the greenbelt, without public access and/or high environmental value, can continue to justify protection.

In the next ten years, it’s highly likely we’ll see a relaxation in laws and an overall reduction in green belt land, which will increase the amount of land available for development. However,rather than simply filling the space with large individual houses with significant gardens (like those built during the 1940s to 70s), we’ll see an influx ofnew-builds comprising multi-occupancy flat blocks and smaller proportioned houses.

+ Housing shortage

As we said, population is seeing a growth spike and to expect it to stop rising would be a pipe dream. At best, it may slow a little, but as ever, the trend is upwards. Despite government promises, the current housing shortage will continue,as supply can’t keep up with demand. In turn, we can expect tosee increased development and extensions of existing homes to cater for the ‘live with mum and dad’ 20 to 30-somethings, who simply can’t afford to move out.

+ Renting v buying

Wages not keeping pace with inflation has brought about an increasing new trend – to rent. The ‘Help to Buy scheme’ has benefitted some, but not the majority due to rising house prices quickly exceeding loan limits.

The trend of the decade

Over the next ten years, there will be more renters and less owners as house prices become out of reach of many average-earning families. As rented properties prove more popular, rents will rise significantly to be near (but not exceed) mortgage costs.

Furthermore, average occupancy will change to either single person or more than four – and not exclusively family. Low high rises of 3-4 floors will become the norm and off street parking will attract a premium.Proximity to public transport and other facilities will also increase in importance as the UK’s roads become more and more congested.

Has Brexit increased the need for rental property investment?

PUBLISHED: Selected Property Group | UPDATED: 25 July 2016

URL:  http://www.selectproperty.com/2016/07/has-brexit-increased-the-need-for-rental-property-investment/

One of the UK’s biggest institutional investors says its hearing more demand for people wanting to rent rather than buy following the EU referendum.

Summary:

• Legal and General says its “hearing more demand from people wanting to rent” following the UK’s vote for Brexit
• The institution has invested heavily in several new build-to-rent schemes across the UK
• Build-to-rent could provide 10% of the new homes the UK needs

There’s currently a currency window of opportunity to invest in UK real estate right now – and it’s the build-to-rent sector international investors should choose.

Following the EU referendum, the pound fell to its lowest value for 31 years. For those investors dealing in dollar-pegged currencies, it creates an immediate opportunity to buy UK property.

Now, one of the country’s largest institutional investors has outlined why those looking to capitalise on this opportunity should look at the build-to-rent sector in particular.

In an interview with Architects Journal last week (July 21^st), Dan Batterton, Fund Manager at Legal and General, outlined why his company has been a key investor into the rental sector that is set to be worth £50 billion by 2020.

And responding to a question about the sectors performance following the Brexit vote, Batterton responded:

“There is a natural hedge in investment into the rental sector. In times of economic uncertainty people put off large decisions like house buying, but they still need to live somewhere.

“Anecdotally, following the referendum, we are hearing demand from more people wanting to rent and not wanting to buy. When we look round the world to established build to rent markets, such as the US, the rental sector provides consistent demand to the construction industry regardless of market conditions – it is less cyclical than building for sale.”

Legal and General has invested heavily into a number of build-to-rent developments across the UK, from Manchester to Bristol, aware of the growing demand to create a product for a generation of British workers who actively choose to rent their homes.

Batterton also believes the backing the sector has received from outgoing housing minister Brandon Lewis, and his new successor Gavin Barwell, underlines the importance the UK government places on build-to-rent investment.

With Britain in the midst of a housing shortage, build-to-rent, Batterton asserts, could “provide 10% of the new homes we (the UK) needs”.