LANDLORD NEWS
Rise in ‘accidental landlords’…
Estate agents have reported that an increasing number of homeowners who are unable to sell their properties are being forced to become landlords, as the property market slows down. Marsh & Parsons said it has seen the biggest surge in “accidental landlords” since the last housing market downturn during the financial crisis. The agency’s Graeme Young said those who are unwilling to drop the prices of their properties to ensure a sale had been turning to the rental market to help pay for their mortgage costs. Gary Hall, of Knight Frank estate agents, said: “There was a reassessment over Christmas, with people looking at their plans and thinking: ‘Actually, it’s not the right time to sell, let’s hold for a year or two years, and let’s rent the property out.’ That came across and that definitely started. It was across the board in all parts of London.”
The Daily Telegraph
… translates to rental availability
The number of new lettings listings in the final two months of last year was 15% higher in England and Wales than in the same period of 2021, according to the property portal OnTheMarket. Out of all properties new to the lettings market so far this year, 3.7% are being listed because their owners couldn’t sell them, according to Hamptons. Knight Frank said it was getting more requests for rental valuations than at any time in the past five years. The number of queries in the first seven weeks was 46% higher than the average during that period over the past five years. Hamptons said there could be 34,000 more properties available to rent from landlords who have been unable to sell than last year. It added that accidental landlords were most common in Wales and the northeast of England, where prices have fallen more.
The Times
Mayors demand private rent freezes
The mayors of London, Manchester and Liverpool have demanded a freeze in private rents and an eviction ban to tackle the rental crisis. Sadiq Khan, Andy Burnham and Steve Rotherham are among the figures to sign an open letter to Michael Gove calling for a Scotland-style freeze – which they claim will prevent “huge numbers” becoming homeless. They are joined by leaders of the Green Party as well as union leaders including RMT chief Mick Lynch. Their letter states: “Prior to this crisis, renters were already spending four to five times as much as owner-occupiers on housing. Yet landlords, with the encouragement of letting agents, are using this crisis as an opportunity to introduce rent hikes.” The London Renters Union spokesperson Liam Miller said: “A rent freeze now is the only way to address the scale and urgency of the crisis, and would represent a step towards a stronger housing system that meets everyone’s needs.”
Mirror.co.uk The Guardian
BUY TO LET
BTL remains investment of choice
With savers receiving poor returns from banks and building societies, Property Industry Eye looks at how people are continuing to turn to residential property as a means of supplementing their income, supported by high demand from tenants and stable yields, as buy-to-let remains the investment of choice. Despite a difficult few years for the buy-to-let market, marked by regulatory and tax changes as well as for some, higher mortgage borrowing costs, buy-to-let investment has continued to outperform most other main asset classes as rents grow. llison Thompson, MD of lettings at Leaders Romans Group (LRG), said: “The private rented sector is vital to our economy and without it would see a huge increase in homelessness.” Earlier this month, LRG surveyed 271 landlords across its country-wide estate agency brands, from those with a single investment property (46% of the sample) to those with ten or more (4%). It found that only 7% of landlords plan to exit the BTL market in the next year and 12% plan to reduce their portfolio. In contrast, a considerable majority (71%) planned to maintain their portfolio size and 10% planned to expand it.
Property Industry Eye
UK tax authority launches crackdown on holiday let owners
HMRC has launched a crackdown on the short-term lettings market, sending ‘nudge’ letters to about 1,000 property owners that it suspects have not declared rental income on their self-assessment tax returns.
Financial Times
COMMERCIAL
Record demand for London office space
Analysis by real estate services firm Avison Young shows that firms in the professional services sector took up 50% more central London office space last year than in 2021, acquiring a record 2.5m sq ft in 2022. Workspace uptake from law firms, accounting businesses and consultancies surpassed highs recorded in 2010 by 35%. The increase was driven by a spike in demand for services, as well as net zero targets that have seen firms opt for more environmentally friendly workspaces as they look to achieve their climate goals. The report also shows that London’s financial sector took up 2.2m sq ft of office space in 2022, the biggest uptake of office space since before the pandemic. However, tech, media and telecommunications firms saw their office take-up levels drop 45% below 10-year averages.
City A.M.
Supermarkets vie for control of corner shops
The Sunday Telegraph profiles how Aldi and Lidl have made convenience stores the latest battleground for supremacy in the grocery sector. Aldi has announced it plans to double the number of stores it has within the M25, while Lidl has also said it is aiming to “take on the established supermarket convenience offering.” Industry experts say that a shift towards smaller, city centre shops was inevitable for the discounters. Currently the vast majority of their stores are located in retail parks and suburbs. In contrast, Tesco has targeted more urban inner-city areas for its Express stores. The discounters were bound to want to compete, comments Shore Capital analyst Clive Black. He says: “Aldi and Lidl are maturing at quite a pace. Both of them are probably somewhere like 85% through their British development plan. London was always going to be the last frontier for Aldi and Lidl.”
The Sunday Telegraph
Aldi to open more stores in London
Aldi has announced that it is planning to open 60 new stores in London. The discounter is looking for property agents to help identify potential sites for stores and is offering a “finder’s fee of either 1.5% of a freehold price or 10% of the first year’s rent for leasehold sites for recommending a previously unknown site.” Ben Shotter, the regional managing director at Aldi, said: “We’re conscious that there are still many areas, particularly in the capital and within the M25, that don’t have access to an Aldi.”
Metro
Primark at Westfield Stratford is set to double in size
Primark has unveiled plans to double the size of its store at Westfield Stratford. The fashion retailer currently covers 45,100 square feet over two stories, but this is set to increase to a massive 81,000 sq ft over four floors. The expansion will result in the creation of 250 jobs at the East London shopping centre. The expansion is part of Primark’s plan to invest £140m in the high street, adding 160,000 sq ft to its stores and creating at least 850 new jobs.
London Evening Standard
Virgin Media O2 reveals plans to open new London HQ
Virgin Media O2 has revealed plans to create a new ‘multi-million’ pound London headquarters in Paddington and close its existing sites in both Hammersmith and Slough. A lease for the new HQ building at Paddington Central’s 3 Sheldon Square has been agreed with developer, British Land. Patricia Cobian, Virgin Media O2’s chief financial officer said “While we’re proud of our long history in Slough, with two incredible offices in Reading and London this investment is an important step in our integration plans that will better support our flexible working culture, while bringing the buzz back to the office and creating exciting new opportunities for our people to collaborate.”
City A.M.
AUCTION NEWS
Auctioneers benefit from rising rates
Since interest rates started rising, and the property market turned at the end of last year, auction houses are reporting that business is booming. Auction house Allsop reports that it has 15 to 20% more lots for sale than a year ago. In the final three months of last year My Auction had 77% more lots to sell, with 38% of properties being sold by buy-to-let investors looking to quit the market, according to Stuart Collar-Brown, a co-founder of the online auctioneer. “Along with professional investors or developers who need to offload properties, we are having a lot more conversations with private individuals who need to sell to clear a debt,” he added. A busy autumn for auctioneers was also fuelled by people racing to buy ahead of the anticipated interest rate rises – an auction sale completes in 28 days, while the average time for a private sale is 62 days to find a buyer, then 145 days to complete.
The Sunday Times
PROPERTY FINANCE
House values hit £8.7trn as prices soar
The value of the UK’s residential housing stock reached a record £8.68trn last year. Calculations by Savills show a £425bn increase in property values in 2022, bringing the total rise since the start of the pandemic to £1.6trn. Most of this growth was outside London as city-dwellers moved to the countryside. The data showed that 53% of £1m-plus homes were now outside the capital. Of the £8.7trn worth of residential property, just over £7tn is in the hands of owner-occupiers, with £1.7tn of the value owed in mortgage debt. Of this, almost half – a record £3.34tn – was held by mortgage-free homeowners. Analysts suggested that rising prices had contributed to a crisis for first-time buyers. UK Finance, the banking industry body, said there had been 370,220 new entrants to the housing market nationally in 2022, down from 405,360 the year before. Savills said the figure could drop to as low as 200,000 this year. Savills also predicted that property prices would fall by 10% this year as the market slowed.
Daily Express Daily Mail The Guardian The Times
Britain’s best performing property hotspots revealed
Research by Hamptons, using data supplied by the ONS, has revealed that average property values in percentage terms across 27 local authorities across Britain doubled or more in the 14 years since the financial crisis of 2008. “Like most property cycles before it, the current one began with stronger price growth in London and the South,” says Aneisha Beveridge, head of research. “As we near the end of the cycle, northern locations are performing better but not enough to offset years of underperformance.” Looking at price growth, the predictable names top the charts: Kensington & Chelsea, the City of London and Westminster take the top three spots. But looking at percentage growth, areas largely on the edge of the capital, take the lead. Factors that have had a major impact on the fortunes of areas include large-scale regeneration and infrastructure projects. A further trend that emerges has been the knock-on effect of the pandemic. The desire for flexible commuting and the need for outside space led to values in outer London boroughs, commuter towns and regional cities outperforming areas of prime central London.
The Daily Telegraph
LENDING CONDITIONS
A tracker mortgage could save you £4,429
A borrower who bought the average home with a 25% deposit and a 25-year mortgage would have saved £4,429 over the last 20 years if they repeatedly took out two-year trackers instead of two-year fixed deals. The total cost of the mortgage on a £119,938 home – the average price in 2003 – would have been £113,658, compared with £109,224, research firm Defaqto found. Experts said borrowers were effectively charged more for the certainty of having a fixed rate. The average two-year fixed rate for a new mortgage with a 25pc deposit was 4.55% at the beginning of 2003, while the average two-year tracker rate was 4.18%. Tracker rates for those remortgaging were cheaper at the beginning of every subsequent year apart from 2007.
The Daily Telegraph
ECONOMY
Regional variation in inflation impact
EY analysis suggests that the impact of inflation on economic growth will vary across the country. The report says that London is the only part of the UK expected to outperform an average contraction of 0.6% this year, while the North of England and the Midlands will endure the worst economic contraction. The gross value added to local economies in the East Midlands and Yorkshire and the Humber is forecast to contract by 1%, with pressure on consumer-facing sectors such as retail and manufacturing taking a toll. A higher exposure to more resilient sectors, such as professional and financial services, is set to limit the contraction in London to 0.2%.
The Times The Daily Telegraph
