LANDLORD NEWS
Renters face financial pressure despite rate rises
Renters are facing intense financial pressure despite 14 consecutive interest rate rises, according to research from Zoopla. The average rental cost for a new let has increased by £231 per month since the pandemic, reaching £1,163 per month. In comparison, mortgage holders have experienced a £269 per month increase. Rental costs are outpacing earnings, especially in regions such as Scotland, the North West, and Yorkshire. Zoopla’s research director, Richard Donnell, highlights that renters are feeling the pinch more than mortgage holders. Rental growth is expected to continue while mortgage rates drop. However, mortgage-holders have options to decrease monthly costs, while tenants do not.
The I
Rent increases hit most deprived areas hard
People living in the most deprived areas of Britain have seen their rents increase by 52% over the past four years, while for tenants in the wealthiest regions, rents have risen by only 29%. The countrywide data analysed by Hamptons reveals the disparity in rental costs. Renters in deprived regions were paying an average of £499 a month in 2019, which has now risen to £759. In contrast, those renting in Britain’s most affluent districts were paying an average monthly rent of £1,078 in 2019, increasing to £1,387 this year. The rising costs are driven by factors such as higher mortgage rates and limited supply of homes. The housing crisis and cost of living crisis are squeezing incomes, with renters more likely to be living in poverty. A third of private tenants are in poverty, driven by high housing costs and low incomes.
The Guardian
BUY TO LET
Buy-to-let yields climbing in some parts of the country
Landlords can secure close to double-digit returns as buy-to-let yields are climbing in certain parts of the country. Yields in areas around Glasgow, Scotland, are 8% or higher, with Renfrewshire seeing a 13% increase in the past year alone, data from Zoopla reveals. Even in low-yield areas like Kensington and Chelsea, yields have risen by nine to 13%. However, rising mortgage rates and onerous regulations are pressuring landlords, leading to many selling their properties. Despite this, scarcity of rental properties is boosting yields for those remaining. Glasgow’s rental market is growing due to expanding universities and increasing demand from companies like Morgan Stanley and Barclays. Toby Parsloe, analyst for Savills, explains that areas with the highest yields tend to be those where property prices are lower, but where there is a strong employment market where some workers can afford comparatively high rents.
Mail on Sunday
COMMERCIAL
Incentives for London offices decrease as competition rises
Incentives for new London office developments have become less generous as employers compete for modern space, according to research by Carter Jonas. Rent-free periods, typically offered to secure longer leases, have reduced to between 20-26 months on a 10-year lease for new and refurbished Grade A space in central London. The report also noted that rent-free periods have modestly reduced in Mayfair and St James’s over the past year. Demand for grade A office space with good green credentials is outstripping supply in some sub-markets, resulting in a compression of rent-free periods. However, owners of older buildings may face tougher times ahead as firms look to upgrade to more desirable spaces.
London Evening Standard
Rare Central London buildings up for sale
Sovereign wealth funds, overseas billionaires, and cash-rich family estates are expected to compete for a portfolio of central London buildings in Fitzrovia, valued at over £100m. Shaftesbury Capital, the West End landlord, has decided to sell all of its properties in Fitzrovia, including pubs, bars, restaurants, offices, shops, and flats. The assets are expected to be handled by CBRE. Shaftesbury’s CEO, Ian Hawksworth, confirmed the sale, stating that the Fitzrovia properties do not meet their investment criteria. The sale is part of a capital recycling program, with potential for significant rent increases in other areas.
The Times
Issa brothers set to sell £500m chunk of Asda’s property empire
The billionaire Issa brothers, who bought Asda from Walmart in 2020, are reportedly close to selling a £500m chunk of Asda’s property empire to Australian finance house Macquarie Asset Management. The deal involves ground rent leases for about 50 Asda stores in Britain, with a provision for Asda to reassume ownership at the end of the term. This structure allows Asda to raise equity while paying a relatively low rent. Other supermarket chains, such as Morrisons, Tesco, and Sainsbury’s, have also engaged in sale-and-leaseback deals to manage their property portfolios and reduce lease liabilities.
The Times
AUCTION NEWS
Come and meet the DMI team at live auctions next month
Why not visit a real live auction, see the bidding live and meet some of the DMI team who will be in attendance arranging funding for successful bidders? Upcoming auctions include Barnard Marcus in London on 11th September and Cottons in Birmingham on 13th September. You can review their websites for a list of Lots or just pop in for a coffee and a chat. See you there!
Former church in Cumbria up for auction
Bond Wolfe’s next livestreamed auction, on Thursday, September 14, will feature a Grade II-listed former church in Cumbria with planning permission for redevelopment into a luxury residence. The former Lowther Street Methodist Church in Whitehaven’s coastal town will be auctioned off with a suggested price of £60,000+. Ian Tudor, commercial auction director at Bond Wolfe, said: “This is a substantial property, constructed in a Gothic style, with many attractive features. While permission has been granted for conversion to a residential dwelling, it could also be suitable for a variety of alternative uses including a bar, restaurant, community uses, a dance or fitness studio, all subject to planning.”
The Business Desk
PROPERTY FINANCE
Home sales set to be lowest since 2012
Data from Zoopla shows that the number of home sales over this year is on course to be the lowest annual total for 11 years. The number of housing sale completions in 2023 is set to fall 21% year-on-year to 1m – with this the lowest level since 2012. The study also suggests that annual house price growth will slow to 0.1%. Richard Donnell, executive director at Zoopla, said: “House price growth has slowed rapidly over the last year as demand weakens in the face of higher mortgage rates.” Zoopla said that over the last four weeks demand for homes was 34% lower than the average for the same period over the last five years. The report estimates that the cost of renting is on average 10% cheaper than making mortgage payments. Lack of affordability is affecting the housing market the most in southern England, where average house prices are highest. Levels of market activity are holding up better in more affordable parts of the UK, including parts of Scotland. “These trends will continue over the rest of 2023 and into 2024,” said Zoopla.
Daily Express Daily Mail The Daily Telegraph The Times
Home sales down 16% in July compared with last year
Figures from HMRC show the number of home sales taking place in July was 16% lower than in the same month a year earlier. Across the UK, 86,510 residential property sales were recorded, up by 1% compared with June. Excluding the pandemic years 2020 and 2021, the last time house sale figures fell this low in July – typically a buoyant month for the market – was before 2014, when HMRC data collection began. Just 336,860 property transactions took place between April and July this year, down 21% on the same period last year and the lowest figure recorded since the pandemic. Justin Moy, of mortgage broker EHF Mortgages, said: “Property transactions have been much lower than usual, which is unsurprising given rising interest rates, high inflation and broader economic uncertainty.”
The Daily Telegraph City A.M. Daily Express London Evening Standard
UK house prices fall at fastest rate since 2009
House prices fell by 5.3% in the year to August, according to Nationwide, the fastest annual drop in 14 years. The bigger-than-expected drop brings the average house price down £14,600 to £259,153 compared with a year ago. “The softening is not surprising given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels,” said Robert Gardner, the chief economist at Nationwide. The number of completions of house sales was down 20% in the first half of the year compared with 2019, and about 40% down on 2021. While the proportion of people buying with cash has remained strong, the number of completions by those requiring a mortgage has plummeted. There was also a 25% drop in first-time buyers in the first half of 2023 when compared with 2019, Nationwide said, while buyers turned their attention from detached homes to smaller, less expensive properties.
Sky News Financial Times
LENDING CONDITIONS
Mortgage lending falls in Q2
Figures from UK Finance show that there has been a decline in mortgage lending, with lending for house purchases down 28% year-on-year in Q2. The lending value was £4.3bn – a drop of 45.7% compared with the same quarter last year. UK Finance said levels of housing market activity “have remained very low by comparison with recent years” in the first half of 2023. The industry body said this was driven by the “significantly greater affordability challenges currently faced by borrowers,” with rising interest rates delivering a hike in the cost of mortgages. The report shows that record numbers of borrowers chose to refinance with their existing providers, with 84% of remortgaging deals internal transfers. This compares to an average of 77% across 2022. UK Finance figures also showed 90,680 mortgages were in arrears from April to June, a leap from 83,760 in the first quarter, and the highest level since the start of 2018. However, home repossessions fell.
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Mortgage approvals drop nearly 10% month-on-month
The number of mortgage approvals made to home buyers fell by nearly 10% between June and July, according to Bank of England figures. Experts say rising rates have slowed the housing market with the typical new mortgage carrying an interest rate of 4.66%, up from 2.33% a year earlier. Banks and building societies approved just under 49,500 mortgages for home purchases in July, the lowest number since February and down from more than 63,000 a year ago. Home loan debts are up just 1.5% compared with July 2022, the smallest annual increase since early 2014. A typical new mortgage came with an interest rate of 4.66% last month, up from 2.33% a year ago, the Bank of England said.
The Daily Telegraph The Times
Brothers and sisters help each other buy first homes
Almost a third of first-time homebuyers in Britain received financial help from family, with support from siblings doubling in the past six years. Brothers and sisters assisted in a record 11% of family-funded first-time purchases, according to research from Hamptons and Skipton Building Society. The decline in homeownership rates among parents has led first-time buyers to rely more on other family members for deposits. Family support allows buyers to put down larger deposits and purchase homes at a younger age. While support from parents and grandparents is slowing, parents remain the most generous, with 72% of first-time buyers who had help receiving it from their parents, providing an average gift of £15,250. This was down from 80% in 2018. Some 8% were given money by grandparents, 4% aunts or uncles and 1% a son or daughter.
The Daily Telegraph The Guardian The Times
ECONOMY UK recovered much faster from pandemic than thought
The UK economy shrank less during the pandemic and bounced back faster than previously thought, revised figures from the Office for National Statistics show. The updated figures add nearly 2% to the size of the economy as of the end of 2021, meaning Britain recovered to its pre-pandemic size almost two years ago. The ONS previously said the economy was still 1.2% smaller than its pre-lockdown size at the time. However, GDP is now believed to have been 0.6% above pre-pandemic in the final three months of 2021. The ONS also said the economy shrank by less than expected in 2020, contracting by 10.4% rather than 11%. In 2021, the stats body now estimates the economy bounced back by 8.7%, rather than an earlier estimate of 7.6% growth.
BBC News Financial Times The Daily Telegraph The Times
