Landlord Mortgages, news in brief.
ARLA Chief Executive state, according to the quarterly survey, more investors in London are now buying more properties that are either in need, or have been refurbished, instead of new builds.
In London landlords are buying 100 year plus buildings because they find the Edwardian and Victorian properties can be converted easily and are spacious and well built making them good rental properties. In other parts of the UK investers tend to buy properties that are under 10 years of age.
There is a high demand for rental properties and over half of the agents in London say they have more demand than stock. In the South East it has risen around 5%. Other parts of the UK also report rises in demand.
The main concern is that new regulations of 2006 for landlords investing in multiple occupancy are problematic because of the HMO licensing and alterations needed to comply are too expensive proving the HMO market is suffering.
The Housing Market Date Response by Capital Economics has reported house prices got off to a good start in 2007 but a significant slow down is expected this year.
House prices rose by 2.1%m/m in January the largest gain the 5yrs left of the index. This in monetary terms is a rise of £4.200.
Northern Ireland had the highest growth and elsewhere in UK prices rose between 2.2%m/m and 3.3%m/m
It is expected that higher interest rates and price pressure are likely to make prices weaker by the end of the year.
The Council of Mortgage Lenders believe higher interest rates have cause 85% of first time buyer and 70% of home movers to opt for fixed rate deals this year.
This is encouraging as first time buyers is the group that is more financially stretched and therefore would suffer most if interest rates rise.
House prices grew by 0.7% in February. This is the highest monthly increase in prices since May 2004 making the growth rate 6.4%. Interest rates and a limited supply act as major constraints.
Registered properties in February rose by 14% but there was a 23% increase in the number of buyers. Two thirds of price rises were in the South of England . East Midlands, Yorkshire, Humberside and Wales average prices grew by 0.1% and the selling time averaged 7+ weeks. In London the figures fell and stand now at 2.5weeks.
The below average levels of transactions and prices are being set by those who can afford to move i.e existing house owners, but to let investors and ‘assisted’ first time buyers.
There needs to be an increase of properties coming on to the market if the current upward pressure is to be eased.
Unless there is an unforeseen shock in house sales because purchases seem willing to pay the prices to enable them to access the market house prices look to rise over the coming months.
The number of tenants waiting residential properties showed a rise in the quarter to January 2007.
Surveys showed that the strengthening economy and employment during the last six months and some tenants coming from the enlarged EU were the cause of this rise.
The RICS say that there are few signs that the buy to let market is booming and that it is calmer now than the end of 2001 to 2004.
This is the eleventh consecutive quarter that the tenant demand for property is higher than availability.
Residential gross yields showed a drop for the second consecutive quarter but this is to be expected with house prices rising and rent rises slowing.
This likely to cap short term investors as the interest seems still to be rising.
Edinburgh is Scotlands second largest city and currently has the strongest economy any UK city other than London.
Over the last five years house prices in Scotland have almost doubled, Edinburgh being the most expensive. Local prices rose 12% in 2006 reaching an average of £202,941 and the average rent at start of 2007 was £622 per month.
Leith, in the north of the city, is now subject to a great deal of development . Existing plans allow for up to 30,000 units, mostly flats, and to house 45,000 people by 2020 over an area of 140 hectacres.
Leith waterfront area needs to look into supply/demand and that the area is still under development and therefore occupiers will have noise and dust around for some time. Generally city centre properties are still in greater demand the those on the waterfront.
Edinburgh has a low volume of 3 or 4 bedroom houses and such properties tend to sell quickly and with first time buyers eager to purchase properties there is also a demand for smaller properties in the city. Demand is in excess of supply and in Edinburgh with the population rising and the ratio of single person households this situation is likely to remain, at least in the short term.
Private investors purchase city apartments and student residences these both are always in demand. For those interested in the student market they will find that the landlords who are willing to provide higher quality specifications will benefit.
Licensing has caused a few problems for landlords in Edinburgh .Due to the costs involved it probably more suited to the professional landlord. Three bedroom properties are probably not worth licensing as the rent for the third person will merely pay for the license. There are complaints of HMO properties as neighbours see it as an opportunity to complain about anything that may not be done within the property.
The demand for owner occupiers is high and thus affecting the overall asking and closing price. Upto 20 offers are going in for single units and these are attaining 40% over the asking price.
The UK commercial investment property market attained a record high in 2006 with transactions up 13% from 2005. It now said to be three times larger thatn 2001
The last three months of 2006 ended and 2007 began rather slowly with investors deciding to wait and see how the interest rates changed . There is, however, still a demand for property and if the price is right investors are willing to purchase.
It is reported that landlords of commercial properties are likely to end up in court if they do not comply with the changes of legislation. This is the third revision of the Lease Code and professionals should take heed. I they do not comply the government will be forced to impose further legislation to both landlords and occupiers.
Buy To Let News
Glasgow area has the largest single market and residential property sales reached £175bn in 2006. Price rises were below average at 7% the average house price was £148,848
Prices of redeveloped designer properties along Broonielaw waterfront rose by 12.4% last year.
Affordable housing has been built in recent years in Glasgows Northern and Eastern districts giving annual increase of between 10% and 11.6%.
Property prices in general in Glasgow have grown considerably during 2006 –2007 but 2007 is predicted to have a slower price rise. Due to a lack of properties for sale purchase prices have been extremely high.
Tenants want to live within the city centre and investors are seeking city centre apartments as well as student accommodation.
The student letting market is buoyant with a lot of parents now purchasing property for children to live in during their study years but there is still a large demand for smaller flats and studio apartments.
The BofE had to raise interest rates at the beginning of 2007 it was merely doing its job because of the growing economy. Although unemployment is rising the number of people in work is very high.
House prices rose by 12% during 2006 and at the end of the year rose the fastest in two years.
It is reported that it’s because of the higher wage growth that inflation, around 3%, has risen faster that predicted.
BofE seem to be trying to put inflation back on track by the middle of 2007.
