LANDLORD NEWS
Lenders reduce fixed rate mortgage costs
Lenders are continuing to lower the cost of mortgage packages, indicating that the cost of borrowing has approached, if not achieved, the peak of the rate-hike cycle. Last week, Santander, Coventry Building Society, Clydesdale Bank and The Mortgage Works all reduced Buy To Let fixed rates. The lenders follow in the footsteps of Nationwide, Barclays and TSB which, last week, also announced a raft of rate cuts. However, according to UK Finance, recent rate cuts will be cold comfort to the customers of an estimated 2.4m fixed rate deals which end between summer 2023 and the end of 2024. The trade organisation launched its Reach Out campaign last week which is designed to raise awareness of the support available to homeowners struggling with higher mortgage costs. The campaign follows June’s publication of a new Mortgage Charter, which sets out joint commitments between the government, the Financial Conduct Authority and the 43 lenders that have signed, to offer more options for struggling homeowners.
Forbes
Khan calls for rent controls
City Hall analysis of data from Rightmove and Savills reveals that rents in London could rise £133 to a record £2,700 a month on average next year. London mayor Sadiq Khan, who has campaigned for the Government to introduce a two-year rent freeze, said the worsening outlook for rent prices was the “clearest picture yet” that controls are necessary. He said: “Private renters make up nearly a third of everyone living in the capital, but they are being consistently let down by a government that refuses to listen and take urgent action to protect them from even greater financial hardship.” City Hall found that if a two-year rent freeze were introduced, renters would save £3,374 on average. Ben Twomey, chief executive of campaign group Generation Rent, said Mr Khan should be given devolved powers that would allow him to control rents. However, he also said this “doesn’t address the lack of homes that allows landlords to charge so much on new tenancies”, adding: “To tackle that we also need a big increase in the supply of social and affordable homes.” Meanwhile, James Wood, of the NRLA, warned that rent controls would only push landlords to sell up and make it more difficult for people to find places to live.
The Daily Telegraph
Rogue landlords avoid being named
Rogue London landlords are avoiding being “named and shamed” on a public database by claiming it is not in the public interest. Some landlords have convinced officials that there are “exceptional circumstances” why their names should be kept private. At least 18 rogue landlords have successfully avoided being publicly named in the past three years. The Rogue Landlord and Agent Checker, introduced by Mayor Sadiq Khan, was meant to expose poor landlords. However, many “rogue” landlords are not on the public database, and some boroughs have no public records. The Mayor’s spokesperson stated that the database has been used 400,000 times to protect renters. The government plans to create a similar public rogue landlord checker across England.
London Evening Standard
Renters spend four times more on housing than homeowners
Analysis by the Resolution Foundation shows that renters spent 34% of their incomes on housing costs in 2021-22, compared to 9% for mortgage holders. Cara Pacitti, senior economist at the think tank, said private renting remained the most expensive type of housing despite rises in costs for homeowners. Labour said the figures showed renters were being hit by a “double whammy” of rising rental costs and the ever-increasing cost of buying a house, making home ownership an increasingly distant prospect. Meanwhile, call handlers working for the housing charity Shelter told The Independent they were now dealing with people facing “crazy” rent rises as high as 50% of what they were previously paying – while new tenants are forced by letting agents to take part in a bidding war for a roof over their head. Polly Neate, chief executive of Shelter, said the increased demand for private rentals “driven by years of government failure to invest in genuinely affordable social homes” was driving up rents.
The Independent
Lettings boom opens doors for estate agents
Estate agents are expanding their lettings businesses to offset declining home sales, as rising mortgage costs drive rental demand and prices increase.
Financial Times
COMMERCIAL
Demand for office space above pre-Covid levels
Data from Rightmove and property intelligence supplier EG shows that demand for office space remains higher than pre-pandemic levels, despite a surge in remote working. While interest in leasing office space in the first four months of the year was down 8% on last year, it is 9% above levels recorded in 2019. Scotland leads the way, with demand up 7% on 2022 and 11% on 2019. London, however, has seen demand for office space fall 11% in a year and 1% since 2019. In the retail sector, demand for space has fallen marginally year-on-year but is 11% up on the pre-pandemic level. Demand for leisure and hospitality space is down 8% on pre-pandemic levels but for industrial and warehousing space, there has been an increase of 7%.
The Times
Chelsea FC owners and PE firm to fund Canary Wharf expansion
The owners of Chelsea FC, in collaboration with a private equity firm, are funding the £1.1bn expansion of Canary Wharf. Cain International, co-founded by Todd Boehly and Jonathan Goldstein, has loaned £535m, along with Starwood Capital, to Canary Wharf Group. The funds will be used to build the third phase of Wood Wharf, which includes the construction of 1,308 rental homes, retail and hospitality units. The expansion aims to diversify the estate and attract more businesses and visitors. The expansion is expected to contribute to the growth and development of the area, with increased footfall and improved amenities.
The Times
London’s West End sees increase in tenant takings and rents
Shaftesbury Capital has reported sales growth of 15% for the six months to 30 June, attributing the rise to high footfall in its West End stores, which has been “buoyed by increasing international visitor numbers”. The landlord, which owns large parts of Chinatown, Carnaby Street and upmarket Fitzrovia, said that it was experiencing excellent operational momentum and leasing activity along with low vacancy rates of 2.5% of ERV available to let at its properties. The landlord said that between January and June it signed 220 new leases with occupiers at rents that were on average 5% above what letting agents thought they would achieve.
The Times
UK faces shortage of laboratory space in science superpower bid
Rishi Sunak’s ambition for Britain to become a “science superpower” has hit a roadblock as new figures reveal a shortage of laboratory space. Knight Frank reports that businesses are seeking 2.2m sq ft of lab space in the “Golden Triangle” between Oxford, Cambridge, and London, but only 385,000 sq ft is available. Emma Goodford, head of life sciences at Knight Frank, said: “Recently announced government funding packages and measures aimed at accelerating the sector’s growth – though positive steps, reflecting the importance of life sciences to the economy – increase the urgency with which new high-quality space must be delivered in markets of particularly high demand.”
The Times
AUCTION NEWS
UK property auction house market reaches decade-high revenue
New research has revealed that the size of the UK property auction house market hit the highest point in a decade in 2022, approaching half a billion pounds in revenue. Digital property pack provider Moverly has analysed the annual revenue of the property auction house sector since 2013 to understand how the market has grown over the last decade. The data shows that in 2022, the UK property auction house sector generated total revenue of £409.3m. This is the highest in a decade and represents an almost 30% increase over 2013, when revenue totaled £316.4m. Moverly is forecasting that by the end of this year, auction market revenue will have recorded a marginal annual decline of -5.3%. However, this will result in annual revenue of £387.7m which is still the second highest in the last decade.
Business Leader Landlord Today
PROPERTY FINANCE
House prices see steepest fall in 14 years
House prices fell at the fastest annual rate for 14 years in July, according to data from Nationwide. The 3.8% year-on-year decline was the steepest since July 2009. The fall took the average UK house price to £260,828, with this around £13,000 – or 4.5% – below a peak recorded in August 2022. Month-on-month, prices were down 0.2% in July. Noting that housing affordability “remains stretched” for those hoping to buy a home with a mortgage, Robert Gardner, Nationwide’s chief economist, said a “challenging affordability picture helps to explain why housing market activity has been subdued in recent months.” Separate data from HMRC shows that house sales fell by 15% in June compared with the same month a year earlier. An estimated 85,870 transactions took place in June 2023 across the UK, which was 6% higher than in May this year. The report said that part of the month-on-month increase can be explained by a higher number of working days in June than in May.
BBC News
Home loan hikes sees more seller discounts
Amid a background of soaring mortgage rates, the market has seen an increase in homes sold at a discount. Estate agents have warned that high mortgage rates are forcing homeowners to sell up quickly as they come to the end of fixed-rate deals and face far higher bills. Homeowners in the South East have suffered the biggest jump in asking price discounts, with data from Zoopla showing that 8% of homes up for sale in the region had reductions of 5% or more in July. This was up from a five-year average of 4.4% and the highest share in the country. The East of England had the second largest share of homes listed with discounts of at least 5%, at 7.3%, while London was third with 6.6%.
The Daily Telegraph
LENDING CONDITIONS
Mortgage approvals up in June despite rates rising
Mortgage approvals in the UK rose unexpectedly in June, reaching the highest level since October 2022. Data from the Bank of England shows that there were 54,700 approvals in July, up from 51,100 in May. Analysts had forecast a fall to 49,000. The data also shows that remortgaging activity also increased last month. Despite the month-on-month rise, approvals were still down by 15% year-on-year. RSM UK economist Thomas Pugh believes the rise in mortgage approvals likely represents a “scramble to secure a deal” before cheaper mortgage products were pulled from the market amid an expected increase in interest rates. Andrew Wishart, senior property analyst at Capital Economics, says it may take a while before approval numbers reveal the impact of climbing mortgage rates. He expects the number of approvals to drop to 40,000 a month, forecasting a 30% drop between 2022 and 2023.
Daily Mail London Evening Standard
Surge in demand for tracker mortgages
More homeowners are turning to tracker mortgage deals in the hope that these will soon save money with interest rates close to their peak. Currently the average tracker rate is 6.02% – far lower than the average two-year fix at 6.46%. After interest rates rose again last week tracker rates will follow suit, but economists and experts suggest the peak is now not far away. Simon Gammon, managing partner at Knight Frank, said remortgaging activity “is being driven by a surge in demand for tracker deals”.
ECONOMY Business confidence falls as UK economy slows
The latest Business Trends report from the accounting firm BDO reveals a fall in business confidence last month. Higher interest rates, weak global demand and a slowing UK economy all contributed to the first fall in hiring intentions in six months. Continuing supply difficulties are taking a toll on manufacturers, whose output fell to its lowest point since May 2020. Kaley Crossthwaite, a partner at BDO, said: “A more pessimistic outlook from businesses and consequent loosening of the labour market are the first indicators of the slowing economic growth expected towards the end of the year. “With yet another hike in interest rates from the Bank of England last week, this downturn is only set to worsen in what should be a golden quarter for many, if more isn’t done to support businesses.”
Daily Express Daily Mail
