LANDLORD NEWS
London rent rises outpace record UK increase in April
Figures from the Office for National Statistics published on Wednesday show higher borrowing costs and a shortage of properties have pushed up prices for renters in the UK. Property rental prices across the country rose 4.8% in the 12 months to April, the biggest increase since 2016, while renters in London faced an even bigger increase of 5%, the highest rate since November 2012. “As long as mortgage rates remain elevated, more Britons will be inclined to rent rather than taking the plunge into home ownership,” said Myron Jobson, finance analyst at Interactive Investor. Tom Bill, head of UK residential research at Knight Frank, said a lack of suitable properties was partly to blame for rising rents and was making “life difficult for a growing number of tenants”.
Financial Times The Daily Telegraph
Exodus from the letting market expected
Analysis by Capital Economics indicates that as many as 735,000 properties will be lost from the rental market if interest rates rise to 5%. Capital Economics said landlords are being forced to sell their properties because of a government decision to slash tax relief on mortgage interest repayments. Reversing the tax change would ease the financial burden on landlords and prevent the sell-off of 110,000 properties, it said. The analysis is based on predictions that the Bank Rate will peak at 5% and remain above 2.5% until the end of 2027. Markets now expect interest rates to peak at 5.5%, meaning the damage to landlords would likely be even worse.
The Daily Telegraph
Immigration jump ‘behind surge in rents’
Record immigration was behind the bulk of the record rent growth across Britain over the past year, analysis shows. Capital Economics said net immigration had created demand for an extra 205,000 rental properties. Home Office data showed that net immigration hit a record high of 606,000 in the year to December. Based on the average household size of 2.37 people, this means net demand for housing jumped by about 256,000. Previous analysis by the ONS shows that at least 80% of people arriving in Britain move into the private rented housing. Based on this estimate, the number of households in need of rental properties will have risen in the year to March by 4.4%. In turn, this would trigger a 4 percentage point drop in vacancy rates. Analysis from America shows that a 1% drop in vacancy rates corresponds roughly to a 1% increase in rents. Capital Economics said: “This could mean that net immigration in the UK could have increased rents by up to 8%.”
The Daily Telegraph
BUY TO LET
NRLA calls for return of tax breaks for landlords
The National Residential Landlords Association has said that scrapping a tax hike on privately rented housing could help to ease the rental supply crisis. Research carried out by Capital Economics for the NRLA has shows that reinstating mortgage interest relief in full for the private rented sector could help alleviate the sector’s supply crisis. Ben Beadle, chief executive of the NRLA, said: “In 2015 the Government said it wanted to ‘create a more level playing field between those buying a home to let and those buying a home to live in’. In doing so it hiked costs for responsible landlords and totally ignored the burden it would create for renters. In the midst of an unprecedented cost-of-living crisis, the Government needs to put economic reality before political pride and reverse this travesty of a reform.”
This is Money
New rules over holiday lets could cause surge in short-term rentals
New rules to crack down on holiday lets could spark a “closing-down sale” style surge in short-term rentals, a former Tory minister has warned. Ministers have announced plans to protect “cherished towns” from being gutted by rental properties that are empty for much of the year. If passed following a consultation, the reforms would mean homeowners who want to turn a property into a short-term let would have to get planning permission to do so. Kevin Foster, the Conservative MP for Torbay, is supportive of the change, but warned that “it’s not unusual that where regulatory change is coming in to see those who benefit from the current rules take advantage of that.”
The Daily Telegraph
COMMERCIAL
Pets at Home plans £400m expansion
Pets at Home has announced a £400m expansion plan, which will see the retailer open at least 40 new shops across the UK, bringing its total number to around 500. The announcement comes as the company reported underlying pre-tax profits of £136m for the year to March 30, up 8% compared to the previous year. “We are confident that our strategy will continue to deliver sustainable growth,” said CEO Lyssa McGowan. She added that it was hard to predict prices over the year ahead, but pledged to pass on any cuts if its own wholesale costs fell.
BBC News The Times City A.M. Daily Mail Daily Mirror The Daily Telegraph
Cities face challenges as staff return to offices at different rates
The pandemic has led to the rise of hybrid working and working from home, leaving cities across the world facing new challenges. London’s ‘re-entry’ rate is still 35% down on pre-pandemic levels, the biggest gap in any of the major European cities studied by JLL. The lack of office workers has had a knock-on effect on businesses serving commuters, from pubs to sandwich shops to train companies. JLL suggests converting older, less popular central city office space into residential units to tackle housing affordability challenges and bring mixed-use vitality to quieter, previously commercial-only areas. Global cities are at an inflection point in navigating structural changes due to the pandemic, and significant opportunity exists to reimagine how we use and interact with city centres.
City A.M.
London office rents soar
Prime office rents along the Elizabeth line’s central London section have leapt, in some cases by 20% since pre-pandemic, as businesses look for the most commuter-friendly locations. Property consultancy Carter Jonas looked at lettings over 5,000 square feet at new office developments, and found annual rises, and growth ahead of pre-Covid levels. Liverpool Street and Farringdon average rents had the biggest gains, with the latter standing at £90 per square foot in the second quarter so far, compared with £85 per square foot and £75 per square foot for the same quarters in 2022 and 2019. Over the same period Bond Street recorded the third-highest growth, up 18.2%. Michael Pain, head of the tenant advisory team at Carter Jonas said a number of new developments have been built in these areas.
London Evening Standard
Workspace sees rental income soar
Workspace Group, which owns buildings in various parts of London, has seen rental income jump 34% to £116.6m in the year to March 31. The FTSE 250 firm has buildings in 76 locations in London and the South East and offers flexible space that firms can fit out. Workspace boss Graham Clemett said the landlord has observed high demand for space at not only City and West End sites, but also in boroughs beyond zone one. He said interest for new and bigger offices is coming from a large range of sectors, including tech, fashion, architecture and more. Clemett said Workspace will continually invest to upgrade and regenerate properties to meet the needs of customers and environmental standards.
London Evening Standard
Chinese owner of Canary Wharf building faces insolvency proceedings
The Chinese owner of 5 Churchill Place in Canary Wharf is facing insolvency proceedings, with FTI Consulting expected to oversee the administration of 5 Churchill Place Management Company Limited. The 319,000 square foot building was bought by Cheung Kei Group in 2017 for £270m. Lloyds Banking Group was attempting to sell a loan secured against the building in March. The development raises questions about commercial real estate values in the aftermath of the COVID-19 pandemic and the prospects for Canary Wharf office blocks.
Sky News
Whitbread considers sale of pub and restaurant arm
Whitbread is reportedly considering the sale of part of its £700m pub and restaurant arm, which includes the Beefeater steakhouse chain and the Brewers Fayre pub chain. The move comes as the company focuses on replicating the success of its flagship hotel chain, Premier Inn, in Germany. The company’s recent annual report warned of the “increasing divergence of performance of the hotel business and the food and beverage business”, which could have a detrimental effect on the premium charged by Premier Inn for rooms compared with its rivals.
The Daily Telegraph The Sun
Kensington & Chelsea pension fund bets big on property
The Royal Borough of Kensington and Chelsea’s pension fund has invested £150m in commercial property over the past 18 months. Cllr Quentin Marshall says the “properties we are buying are good, we are not trying to generate outsized returns”.
Financial Times
PROPERTY FINANCE
House prices hold up despite slow growth
House prices rose by 4.1% annually, despite slower growth than a year ago, according to the UK house price index. The average property price fell by 1.2% in March to £285,009. However, the market is showing resilience, with confidence returning as inflation falls and the economic outlook brightens. Nicky Stevenson, managing director at Fine & Country, said that buyers have more choice than during the “frantic months” in 2021 and 2022 thanks to higher stock levels. The biggest annual increase in value was the 5.2% rise to £483,994 for detached houses. Prices in Wales have risen by 4.8% to £214,000 over the past year, and by 3% to £185,000 in Scotland. In Northern Ireland, they rose by an average of 5% to £172,000.
The Times
Hybrid working drives demand for detached houses
Figures from Halifax show that the proportion of buyers choosing a detached home had increased from 25% to 32% over the past year. The lender puts the popularity down to a desire for more space following pandemic lockdowns and the adoption of hybrid working models. Kim Kinnaird, mortgages director at Halifax, said: “With many businesses continuing to embrace hybrid working, we’ve seen people take the opportunity to find homes that better suit their lifestyles in locations that might not have been practical with a daily commute to consider.” Terraced homes have lost the most interest, falling from 26% to 21% of sales. Semi-detached homes made up 28% of sales in the year to the end of March, followed by terraces with 21%, flats with 12% and bungalows making up the rest. Ms Kinnaird said terraces were increasingly seen as the “first rung on the housing ladder”.
The Times Daily Star The Daily Telegraph
Londoners can make a quicker return on their property investment
New research by Middleton Advisors shows that homebuyers should keep their property for at least nine years to avoid making a loss on their investment. However, Londoners can expect to make a return on their property investment in less time due to a greater number and higher turnover of homes in the capital. The data shows that people who buy flats and terraced properties, which make up the majority of London housing stock, own them for less time than those who are buying detached and semi-detached houses. On average, people are keeping their properties much longer, with the research indicating that private-sector buyers tend to retain their properties for 20.2 years. Over each of the possible 20-year periods since 1952, average UK housing has grown in value by an average of 8.7% a year, a higher median rate of growth than the FT All-Share Index, which averages 6.8% by the same measure.
London Evening Standard
Most viewed homes for sale in Britain
The most viewed homes for sale in Britain have been revealed, with asking prices ranging from £895,000 to £5m. Tim Bannister of Rightmove said that homes from Wales, Scotland, and England feature in this month’s most viewed properties. The most popular homes include a six-bedroom mansion in Kirby Muxloe, Leicestershire, for £4m, a modern family home in Marford, north Wales, for £999,000, a four-bedroom property in Trebetherick, Wadebridge, for £5m, a detached home in Nunthorpe, Middlesbrough, for £895,000, and a property in Whitecraigs, Glasgow, for £1,795,000, which has been redesigned by interior designer Keith Hobbs.
Daily Mail
LENDING CONDITIONS
Mortgage offers in record time
Borrowers can now get their mortgage approved in record time as lenders use increasingly sophisticated technology to automate much of the process. Offers are getting quicker, with some borrowers receiving offers in just 60 seconds. Income, credit, and property details are verified with national credit agencies and fraud databases within seconds. However, anything that complicates an application, such as variable income or being self-employed, is likely to delay a decision. One in 20 borrowers have the credentials to qualify for a 60-second mortgage, but not all lenders have the technology to make an automated offer. Lenders are increasingly relying on “desktop” valuations to cut turnaround times, which allow a lender to check the value of a property using data for similar homes in the same area and online records. However, without a once-over of the property by a lender’s surveyor, buyers could be left in the dark over serious structural faults with their new home.
The Sunday Times
Homeowners opt for shorter, higher-rate mortgages
UK homeowners are increasingly opting for shorter, higher-rate mortgages in the hope that interest rates will have fallen by the time they come to remortgage. According to UK Finance, 14% of new mortgage borrowers took a variable rate in March, the highest proportion since August 2013. Despite the cheapest two-year fixed rate being higher than the cheapest five-year fix, some borrowers are accepting higher payments now in the hope that they will get cheaper soon. Bank rate is expected to peak by the end of this year at 5%, and then fall. Tracker mortgages have also become more popular because many have no early repayment charges, so you can switch at any time.
The Times
ECONOMY Interest rates “need to hit 6% to curb inflation”
Former Bank of England rate-setters have warned interest rates will need to be raised to 6% at least before inflation is brought back under control. The Bank rate currently sits at 4.5% but the most recent core inflation figure comes in at 6.8%, its highest level in 31 years. Willem Buiter, Andrew Sentance and DeAnne Julius, who all worked for the Central Bank’s Monetary Policy Committee, said steeper rate rises will be needed. Mr Buiter reckons rates will peak at “no less than 6%”; Mr Sentance is betting on 5.5% and Ms Julius is predicting between a peak of 5% and 6%. The predictions come as Jeremy Hunt, the Chancellor, said he was comfortable with Britain falling into recession if it resulted in inflation falling. This is now what economists are predicting will happen over the next twelve months.
The Sunday Telegraph
