Tag Archives: House prices

UK house prices set to fall for the next two years Buy to Let News, Landlord News, Latest Articles, Property Investment News, Property Investment Strategies, Property Market News

House prices in the UK are predicted to fall for the next two years before they will increase again, the government’s official forecaster says.

According to the Office for Budget Responsibility (OBR), it says that between now and autumn 2024, house prices will drop by 9%, the body’s Economic and Fiscal Outlook report shows.

The OBR says an economic slowdown, along with rising unemployment and high mortgage rates, will work together to push house prices down.

But, despite the recent slowdown in the UK’s economy, the organisation is forecasting a rise of 10.7% this year for average property prices.

House prices will fall by 1.2% next year

It says that house prices will fall by 1.2% next year and 5.7% the year afterwards.

Then, in 2025 prices will rise by 1.2%, in 2026 they will grow by 3% and in 2027, they will grow by 3.5%.

The OBR report highlights that there are ‘significant concerns’ over its forecasts because of how sensitive house prices are to rising mortgage rates and borrowing costs generally.

The OBR also says that mortgage costs will probably remain higher than many borrowers have become accustomed to over the last decade.

‘Landlords will be clobbered’ by CGT changes

Meanwhile, the managing director of one leading financial services firm says that while last week’s Autumn Statement did not affect the mortgage market – he did highlight that this wasn’t the case for the buy-to-let sector

Kevin Roberts, the managing director of Legal & General Mortgage Services, said that the sector was already feeling the effects of rising mortgage rates.

He said: “The new changes to capital gains tax, will add further pressure to landlords and we are likely to see more rental properties put up for sale.

“A greater supply of housing for buyers will definitely be welcomed by some, but this could prove a painful development for renters.”

He added: “The rental market is already suffering from a lack of stock and rising rents.

“This is an area of the market that needs more government attention and this latest Budget offered little in the way of relief for renters worried about the cost of living this winter.”


The UK’s house prices stall – but rents rise Buy to Let News, House Prices, Landlord News, Latest Articles, Lettings & Management, Property Investment News, Rent Prices

The UK’s average house price increased by 9.5% over the year to September, down from 13.1% in August, data from the Office for National Statistics (ONS) reveals.

The latest house price index shows the annual percentage change slowed because house prices rose sharply in September 2021, which coincided with changes to Stamp Duty Land Tax.

However, house prices remained unchanged between August and September 2022, which has also had an impact on September’s fall in prices.

The average UK house price was £295,000 in September, which is £26,000 higher than this time last year, and unchanged since August.

Average house prices increased over the year to £314,000 (9.6%) in England, to £224,000 in Wales (12.9%), to £192,000 in Scotland (7.3%) and £176,000 in Northern Ireland (10.7%).

Data on the UK’s private rental prices

The ONS has also published data on the UK’s private rental prices which show that rents in the year to October rose by 3.8%, up from 3.7% in the 12 months to September.

Annual private rent prices increased by 3.7% in England, 3.2% in Wales and 4.2% in Scotland.

The East Midlands saw the highest annual percentage change in private rental prices (4.8%), while London saw the lowest (3.0%).

The data from ONS also shows that UK rental prices have increased by 15.6% since January 2015.

The latest ONS house price index

Commenting on the latest ONS house price index, Nathan Emerson, Propertymark’s chief executive, said: “Things are changing, and our members are seeing a steady shift back towards a buyers’ market with the biggest proportion of sales now being agreed at asking price or below.

“Demand is continuing to outpace supply and despite buyers negotiating harder with higher borrowing rates to consider, realistically priced homes are still selling.”

On the index of private housing rental prices, Mr Emerson added: “The solution to rising rents is simple: give tenants more choice.

“The private rented sector needs more landlords and the best way to achieve that is to recognise them as the important housing providers they are.”

He added: “Rising buy-to-let mortgage costs are wiping out returns that have already taken a hit as a result of a mounting tax and regulatory burden.

“Proposals to make it difficult to get a property back if a tenancy goes wrong are proving to be the final straw.

“We think a fairer tax regime would make it an attractive investment again.”

Lettings market is unseasonably busy

Gareth Atkins, the managing director of lettings at Foxtons, said: “The lettings market is unseasonably busy.

“So far, we aren’t seeing the typical slowdown we’d expect around the holiday season.

“The remarkable lack of stock may be to blame, at 30% lower year to date than in 2021.”

He added: “Not only are landlords dealing with rising buy-to-let mortgage rates, but renters also who would have become first-time buyers are more likely to remain in the rental market.”

‘Rents are rising at a time when incomes are being squeezed’

Avinav Nigam, co-founder of residential investment platform IMMO, which plans to spend £1bn retrofitting more than 3,000 homes for rent in the UK, said: “Each rental index shows a different level of growth, but the underlying story is clear: rents are rising at a time when incomes are being squeezed.

“While house prices are taking up all the headlines, we are facing a very real affordability crisis in the private rented sector, as people are struggling to make ends meet.

“A weakening for-sale market will only add further pressure on rental housing and renters, as buyers put off their plans and opt for rented accommodation instead, increasing competition for properties in a supply-starved rental market.

“With the government’s policies hurting landlords it’s driving many buy-to-let investors out, we’re facing a perfect storm of rising rental demand and falling supply leading to high rental price growth.

“The big question is who fills the gap left by private landlords? Given the current climate, it won’t be first-time buyers snapping up these homes.”


Rents set to outperform property prices Buy to Let News, Landlord News, Latest Articles, Property Market News, Property News

Rental value growth is predicted to outpace property price growth over the next five years, says one leading property expert.

Nicky Stevenson, the managing director of Fine & Country UK, says that a shortage of stock, increased borrowing costs, and economic pressures are underpinning the market.

She said: “Rental records continue to topple month-on-month across England and Wales.

“The upward price trajectory continues as the gap between supply and demand shows little sign of easing.”

‘Rental threshold of a prime market property’

Ms Stevenson added: “The rental threshold of a prime market property across England and Wales now stands at £2,750, with the average prime rent at £3,661 per month.

“In both the main and prime markets, value growth in London is most marked.”

The average rent for a prime property in London has now reached £5,000, Ms Stevenson says, which is close to £200 per week higher than it was a year ago.

She also highlights that apartment living is popular again in many city centre locations and this is underpinned by news from Rightmove which reports a significant uptick in demand for smaller apartments, with studio flats overtaking one-bed properties as the most in-demand apartment for renters.

More than 4m households live in private rented accommodation

Ms Stevenson also notes that more than four million households live in private rented accommodation, the majority in homes owned by private landlords.

And, according to the British Property Federation, institutionally owned, professionally managed, build-to-rent properties are set to account for more than 8% of private rented households by 2032.

Ms Stevenson said: “Many landlords are unaware of this sector.

“HomeLet survey data suggests just 48% of professional landlords have heard of build-to-rent, falling to less than 1 in 5 of accidental landlords.

“The number of build-to-rent homes is forecast to increase five-fold over the next decade, from 76,800 homes today to 380,000 in 2032.”

She added: “Although the sector has traditionally focused on London and major regional cities, close to half of all local authorities now have build-to-rent in their housing pipelines, over double the proportion in 2017.”

Marked slowdown in annual price growth

Speaking about property prices, Ms Stevenson notes that Nationwide report a marked slowdown in annual price growth to 7.2% in October, compared to 9.5% in September, with a month-on-month price fall of 0.9%.

This is the first monthly fall since June 2021 and the most significant correction since June 2020.

Across the prime markets of England and Wales annual property price growth is currently 8.8%, and the average price of a prime property in southern areas is in excess of £1 million.

She said: “While many forecasters are predicting price corrections in the market, this needs to be considered in the context of the unsustainable growth in the market since 2020.

“Correct market pricing by agents is critical as the leeway between marketing price and ‘real’ price becomes more apparent.”

‘Price differentials are a better way to consider a market’

Ms Stevenson added: “Price differentials are perhaps, a better way to consider a market.

“A 10% fall on a property priced £500,000 equates to £50,000, a similar fall in a property priced £1 million is £100,000.

“Given the substantial price rises seen in the market over the past two years, there is only a low risk of negative equity for the vast majority of purchasers.”


10% drop in house prices predicted by Savills in 2023 Buy to Let News, Landlord News, Latest Articles, Property Market News, Property News

The average UK house price is predicted to fall by 10% in 2023, real estate firm Savills says.

It points out that prices have risen by 24% since March 2020, but as the Bank of England base rate is forecast to rise to 4.0% at some point, this will have a serious knock-on effect.

The firm also says that rents will continue outpacing the growth in wages in the short term.

However, a return to house price rises is expected in 2024, totalling 18% from 2024-2027 with affordability pressures gradually easing.

London and the South East will see the largest falls

Homeowners and landlords in London and the South East will see the largest falls in the short term.

And, despite having the weakest performance over the next five years, prices here will lead market performance from 2027 onwards.

Savills is also predicting that transactions will fall below 900,000 in 2023 for the first time since 2011.

First time buyers and mortgaged buy-to-let investors will be the most affected, putting continued upward pressure on rental values.

The firm also warns that there will be a growing divergence between cash and equity-rich or cash buyers and other groups in their ability to transact.

‘Demand dynamics changed over the autumn’

Lucian Cook, Savills’ head of residential research, said: “The housing market has remained remarkably strong through the first nine months of 2022, but demand dynamics changed over the autumn with the realisation that the Bank of England would need to go faster and further to tackle inflation.

“Affordability will still come under real pressure as the effect of higher interest rates feeds into buyers’ budgets.

“That, coupled with the significant cost of living pressures, means we expect to see prices fall by as much as 10% next year during a period of much reduced housing market activity.”

‘Several factors that will insulate the market’

He added: “There are several factors that will insulate the market from the risk of a bigger downturn as seen after the financial crisis.

“Borrowers who haven’t locked into five-year fixed rates had their affordability heavily stress-tested until August this year.

“This, combined with relatively modest unemployment expectations and signs that lenders are looking to work with existing borrowers to help them manage their household finances, should limit the amount of forced-sale stock hitting the market next year.”

Mr Cook says that the Bank of England’s relaxation of mortgage regulation over the summer has substantially enhanced the prospect of a price recovery; but only as and when interest rates start to be reduced and once inflationary pressures in the wider economy ease.

On the PRS, he said: “Meanwhile, rental value growth will continue to outpace earnings growth in the short-term because of the pronounced imbalance between supply and demand, which will come as positive news to landlords already facing higher borrowing costs, but will put increasing pressure on struggling tenants.”


Rental market picks up steam while house sales stall Buy to Let News, Landlord News, Latest Articles, Property Investment News, Property Investment Strategies, Property Market News, Property News

Demand across the lettings market is high and continues to push rents up, the latest surveyors’ report reveals.

RICS says that tenant demand continues to rise at a ‘solid pace’, with a net balance of +46% of survey participants noting an increase in October.

However, landlord instructions fell once again with a net balance of -14% of respondents.

RICS point out that given this mismatch, rents are expected to be driven higher over the near term, and over the next year surveyors say that rents will rise by around 4% nationally.

UK house market continues to weaken

The survey also reveals that the UK house market continues to weaken, with last month bringing another drop in buyer demand and agreed sales – along with a halt in house price growth.

The October 2022 RICS Residential Market Survey also highlights that new buyer enquiries fell for a sixth successive month in the sales market.

Buyer demand is also negative across all parts of the UK, the second report running where this has been the case.

In keeping with the general pattern of a weakening market, the average time to complete a sale from its initial listing has edged upward, now taking close to 18 weeks.

Last year, the average completion time was closer to 16 weeks.

‘Survey provides further evidence of buyer caution’

Simon Rubinsohn, RICS’ chief economist, said: “The latest feedback to the RICS survey provides further evidence of buyer caution in the face of the sharp rise in mortgage costs.

“As a result, the volume of activity is likely to slip back over the coming months and realistic pricing is now much more important to complete a sale.

“The settling down in financial markets could provide some relief although it may be premature to assume this will be reflected in a reduction in lending rates anytime soon.

“However, the employment picture remains critical to the medium-term outlook and for the time being, that remains solid.

“As far as the lettings market is concerned, the imbalance between demand and supply still appears unusually extended leading to rent expectations in the survey remaining at elevated levels and it is difficult to see this changing anytime soon in the current environment.”

‘Writing is on the wall for house prices’

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “Even naturally optimistic estate agents are starting to think that the writing is on the wall for house prices.

“The chaos in the mortgage market in the aftermath of the mini-Budget has been devastating, and the looming recession is likely to take an even bigger toll.

“House prices have already stalled, and in some areas, they’ve started falling.”

She added: “For anyone who decides to rent for a while – and wait to see what the market has in store – there’s more bad news.

“October saw yet another month of rising tenant numbers and disappearing landlords, so rents are still climbing, and finding a rental property is still an uphill struggle.”

‘Not surprising to see a downturn in the market’

Tomer Aboody, a director of property lender MT Finance, said: “With the uncertainty and disappointment around the mini-Budget affecting the markets, sending Swap rates spiralling which, in turn, pushed mortgage rates to levels not seen in 20 years, it’s not surprising to see a downturn in the market.

“A shift to renting in order to manage their short-term position has seen rents increase as demand outstrips supply.

“As mortgage rates slowly reduce to a more reasonable level, we expect the market to pick up, although not to the levels seen over the past 24 months.”

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “Never was the saying – confidence takes a long time to build but can disappear almost immediately – so true for the property market.

“The mini-Budget frightened the life out of nearly all our buyers who are dependent on mortgages. Many have slowly emerged from hiding as rates stabilised and slowly began to fall.

“New buyer numbers have certainly dropped but we’re seeing no signs of a price collapse.”


Property expert predicts further house price falls Buy to Let News, Landlord News, Latest Articles, Property News

Data from Halifax this week shows that the UK’s house prices fell at the sharpest pace in almost two years last month as rising mortgage rates and a gloomy economic outlook took their toll.

The figures show that house prices fell 0.4% in October – the third decline in four months. The annual rate of growth fell to 8.3% from 9.8%.

The figures echo numbers from Nationwide, which last week said prices fell 0.9% – the most since the start of the pandemic.

Now Jonathan Rolande, from the National Association of Property Buyers, says that while the price falls are ‘fairly small’ they amount to just over £1,000 off an average home.

‘We are heading in the wrong direction’

He said: “The reduction follows a 0.1% drop in September and shows we are heading in the wrong direction.

“What really concerns me isn’t this drop itself, but what might lie ahead of us.

“I fear much worse is to come and that house prices will fall further and faster next month.”

‘Housing market has been rocked by financial events’

He added: “In recent weeks, the housing market has been rocked by financial events including the fallout from the mini-Budget in September.

“The mini-Budget disaster led to much higher borrowing rates, but those lucky enough to already have a mortgage in place would have had it honoured at the old, lower rate.

“Today’s figures don’t yet show the true impact and for that we need to wait two or three more months. I’m concerned that these figures could prove to be worse still.”

Property is still 8% more expensive

Mr Rolande points out that property is still 8% more expensive than it was a year ago, but this could be quickly eroded by further monthly falls.

He said: “We are now in danger of seeing those people who bought property during the summer with homes worth less than they paid.

“Lack of confidence in the market can quickly spiral and price drops can become a self-fulfilling prophecy.

“I hope that we now have a period of some stability and a measured budget in mid-November that gets the property market back on track.”


House prices continue to fall as market cools Buy to Let News, House Prices, Landlord News, Latest Articles

The average house price in the UK fell by -0.4% in October – the third price drop in four months, Halifax data reveals.

Prices fell by -0.1% in September and the annual rate of growth has now fallen to +8.3%, from +9.8%.

Halifax says that the average UK property now costs £292,598, that’s down from £293,664 last month.

The figures show that the rate of growth slowed in all but one region in England during October – and there’s a similar slowing trend in Northern Ireland, Scotland, and Wales.

‘Third such decrease in the past four months’

The director of Halifax Mortgages, Kim Kinnaird, said: “Average house prices fell in October, the third such decrease in the past four months.

“The drop of -0.4% is the sharpest we have seen since February 2021, taking the typical property price to a five-month low of £292,598.”

She added: “While the pace of annual growth also continued to ease, to +8.3% compared to +9.8% in September, average prices remain near record highs.

“Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this in context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 (+25.7%) over the last three years, which is significant.

“While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-Budget which saw a sudden acceleration in mortgage rate increases.”

Ms Kinnaird also said that homebuyer caution is growing with mortgage approvals and demand for borrowing declining.

‘Mini-Budget mayhem exacerbated house price misery’

Sarah Coles, a senior personal finance analyst at Hargreaves Lansdown, said: “Mini-Budget mayhem exacerbated house price misery, with prices dropping faster than they have in over 18 months.

“And with a recession looming, there’s every sign that confidence is draining from the market.

“The housing market doesn’t always move in a straight line, but clearly a downward trend is developing.

“We’re not getting near the realms of price falls yet, with annual growth still at 8.3%, but given it has fallen back from a peak of 12.5% in June, it would be foolish to rule out significant annual price drops in the coming months.”

‘Demand for rental properties is expected to grow’

Avinav Nigam, co-founder of real estate investment platform, IMMO, said: “As it becomes harder and more expensive to buy, demand for rental properties is expected to grow.

“We are seeing property listings falling by 15 to 20% in some parts of the UK, as uncertainty encourages property owners to delay transaction decisions.

“Meanwhile, many smaller private investors are exiting due to higher finance and regulatory compliance costs.

“There’s a clear opportunity for professional providers of safe, quality and affordable rental housing for the UK.”

‘Higher rates mean higher rents down the line’

Gary Wright, co-CEO of payment technology firm flatfair, said: “Understandably, the worry is how this will affect mortgage holders but studies from the Centre for Macroeconomics and the European Economic Review have clearly demonstrated that higher rates mean higher rents down the line.”

He added: “Existing homeowners are fairly well insulated from any shocks.

“Banks have largely learned their lessons from 2008, there are far fewer unsustainably high-LTV loans in the market, and more than a third of houses are owned outright.

“It’s new buyers who will bear the brunt of rising unaffordability. It drives home the need for a more coordinated package of support for those living precariously in the private rented sector.”

‘New buyer demand falling by a third is worrying’

Phil Tennant, the chief operating officer of iBuyer UPSTIX, said: “The dominant feeling across the market is uncertainty. Annual growth is still healthy but new buyer demand falling by a third is worrying, and this will certainly have an impact down the line. The question is how much?

“While forecasters debate over whether we’ll see a dip of six or 16%, broken chains and collapsing deals are already ramping up, causing headaches here and now.

“Data elsewhere shows that fall throughs in October have doubled. Broken chains, which already affect one in five in the market, will only get worse.”


Funding for Lending Scheme withdrawn for household market Latest Articles, Property Market News

The Bank of England have withdrawn their support for the Funding for Lending Scheme, but only to the household market.

The Funding for Lending Scheme (FLS) has been successful in reducing the cost of lending for banks in the mortgage market and contributed to a fall in the cost of borrowing to homeowners. However the Bank of England (BoE) have decided to pull back on stimulating mortgage lending by stopping the FLS scheme which allowed banks to borrow £1 from the BoE at very low rates for every £1 they lend to households.

The concern is the impact a fall in house prices would have on household and bank balance sheets if average household debt was to continue to rise. This was triggered by the latest three month figures showing average  house prices have increased by 6.9%. The BoE did comment that this was mostly localised to the South East, but they were “concerned about the prospective evolution of the market in the absence of some of these changes.”

The potential risk to UK financial stability as borrowing grows in the housing market is a consideration rather than an immediate fear and why it is prudent to take the foot off the accelerator now, but since the credit crisis the Banks have all recapitalised, so the long term risks to their balance sheets and a future crises is now much lower.

£17.6bn was withdrawn under the FLS in 11 months by banks and building societies, but lending to businesses continues to decline.

The FLS will continue to provide support to business lending by offering £5 of cheap BoE funds for every £1 banks lend and with the target for these funds skewed towards SMEs.

Mr Carney said “the changes announced today refocus the FLS where it is most needed – to underpin the supply of credit to small businesses over the next year – without providing further broad support to household lending that is no longer needed.”

The Bank of England are being cautious with the continued recovery not to over stimulate one market by using the tools they have at their disposal with a light touch.

As ever though it is always more complicated with London being the driver of the market growth and a unique economic micro climate compared to the rest of the country. Might a possible alternative or additional solution be making foreign investors pay Capital Gains Tax. This would certainly take some heat out of the London market and increase tax revenues, but by how much, and do we need foreign investment into the country more than the problems it causes in one localised market.

Answers on a postcard please (well actually comments below would be easier).Funding for Lending Scheme


Bank of England Inflation report and what it means for Interest Rates House Prices, Latest Articles

dont panicUnlike the press DON’T PANIC, the economic news is good but not that good in the Bank of England Inflation report.

Reports of imminent Bank Base Rate rises next year are wildly exaggerated and unhelpful to the economy. We had one piece of good news on unemployment and the FTSE 100 took a tumble.

Let’s just start with the facts as CPI inflation is now down to 2.2% from 2.9% in June. This means we are much closer to the medium term targeted inflation than we have been since December 2009. The disclaimer in my previous article about the ONS CPI inflation data was that it did not include the recent energy price increases. However, I have since found out that these increases are actually smaller than at the same time last year so should have no effect on year on year figures.

If you strip out four of the big contributors to inflation: Education, Food, Fuels and Lubricants, Electricity, Gas and other Fuels     you will see that the Core underlying inflation is actually below target at about 1.4%. See table below

Bank of England inflation report

Unfortunately it has been a consumption lead recovery in the UK rather than production as we are sucking in exports from Europe quicker than we are able to expand our export trade to places like China. Hence we are running a trade deficit and not expecting a robust recovery like in the USA, because our increase in export trade has not been dynamic enough.

This can be seen in where the recovery is happening in house prices. London which is lead by the service industry and consumption has had house prices rising by 10% where the National average is 4.3%. The North where manufacturing industry has traditionally been based is seeing little or no increase in house prices dependent on the area.

The figures that got the press in a spin was the decrease in unemployment rates, because the Bank of England had indicated that it would only look at raising the interest rate if unemployment dropped below 7%. However even if it was below 7% now the recovery is not robust enough to even consider raising rates and it is expected that there will only be a 60% chance of unemployment dropping below 7% by the end of 2015. see chart to the right and below:

BofE unemploymet chart

The productivity gap where we were seeing an increase in private employment, but a much lower level of increase in output has now started to close which is good news, but to really see a long term sustainable robust recovery it is business investment that needs to increase so we can compete with emerging low cost markets.

The current figures do not show that corporate investment is increasing, but it does appear that this is changing and may be reflected in future data. Companies may be using their current reserves before seeking borrowing to invest in productivity

The GDP figures shown in the chart below are predicted to improve with growth at about 2 -2.5% per year, but this is within target for GDP without putting pressure on inflation levels or interest rates.

BofE GDP

Predicted future inflation rates inflation rates by  the Bank of England are pretty much spot on the targeted 2% level as seen below

BofE inflation

 

 

 

 

 

 

Overall the UK economy is in a much healthier position than it was a year ago, but stagnation in our main trading partners in Europe and lack of corporate investment and exports means we have little to worry about at the moment concerning an imminent boom and a need to increase interest rates before the end of 2015 or beyond on current projected figures.


A call to convert 66,000 student HMO’s back to family homes? Latest Articles

I have been having a catch up on my on-line reading over this weekend and I have just come across an article which, in my opinion is very ill-informed. A call to convert 66,000 student HMO's back to family homes

Housing supply in many UK cities is being restricted by the conversion of family housing to student lets and local tenants are being prices out, according to new research. International real estate adviser Savills estimates that 66,000 properties or Houses of Multiple Occupation (HMO) now occupied by students could be freed up for conventional family housing through the delivery of more purpose built student accommodation”

The first thing that I would say is that only students want to live near students and the last place I would want to bring up my family is in an area that is highly populated by students.  I love my students tenants but they do not keep regular hours and often return late at night in a happy and noisy mood. There are other issues too but I won’t go into those, most of us who let to students will know what I mean.

For me, the most important point that has been missed is that the cost of converting a family home into a student HMO is colossal and this, coupled with the purchase prices in popular areas, means that landlords have invested a massive amount of money in their properties – will families really want to pay the prices that would cover this investment and also convert the property back to a family home?

In my book “Will You Survive the Mayhem”, I talk about the future of the student market where student numbers are reducing in many areas and there is an oversupply. I have given my predictions of the future of the market and I have warned landlords that we may need a plan “B”.  Plan “B” must, however, take into account that many landlords have big debts on their properties and could not afford to use them for family lets because of the reduced income. There are other markets for which these properties could be used which are realistic and would help to increase supply but Savills are dreaming if they really think that building more purpose built student accommodation is the answer to the shortage of family homes.  They have also overlooked the fact that students can’t wait to get out of “institutional” accommodation and share little houses, at least for their middle year, and there are many empty rooms in purpose build student accommodation in areas where the student population has receded since the increase in University fees.

The article goes on to say

The result is a double whammy for local non student tenants and aspiring home owners. Not only do students price other tenants out of many family housing areas in major UK towns and cities, credit conditions post downturn have favoured landlord investors rather than less equity rich potential owner occupier buyers. ‘Local council coffers would also gain. We calculate that reinstating these student HMOs to homes for non student residents would boost council tax returns by around £1.5 million per town or city, since student only houses are council tax exempt,’ said Savills research analyst, Neal Hudson.”

All local authorities get increased Government funding to cover the cost of Council Tax exemptions for students, the local authority would not be better off if these properties were converted back to family homes, they would in fact be worse off because they would lose the additional “automatic” income and would have to recover it from the families who live there.

The one statement I do agree with in this article is this

“Article 4 of the Town and Country Planning Act proposes restricting new HMO supply which could push students and associated landlord demand into smaller properties, pricing out other occupier and tenant groups.”

I also talked about this in my book because Article 4 Directions are ill-conceived and, in my opinion, will soon sigh and die.

Finally the article says

“For the institutional investor in student housing the UK market offers a mature, counter cyclical investment opportunity”.

Wrong again, I have given a lot of evidence in my book that shows how the student market will continue to recede in all but the Red Brick university areas, many of those are already building campi in the most popular sending countries, and many investors will catch a cold by investing in purpose built student blocks in the next few years.

I am struggling to understand why investors are not being encouraged to put their cash into funds to build more family homes, since we all agree that this is an area of increasing demand and it is very unlikely that the demand will do anything other than grow year on year?

Am I missing something, do Savills know something that I don’t know?

Follow me on Twitter @landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is here >>> http://www.amazon.co.uk/dp/1484855337


Some London streets really are paved with gold House Prices, Landlord News, Latest Articles, Property News

Plush Kensington and Chelsea is the streets ahead as the most expensive place to buy a home in Britain – with average house prices of nearly £2 million.

Buying a house in Kensington costs around £1.87 million and is £90,850 (5%) up on last year’s prices, according to online property portal Zoopla. Continue reading Some London streets really are paved with gold


House sales 40% down on buy to let boom years Buy to Let News, Landlord News, Latest Articles, Property Market News, Property News

The housing market is still trying to shatter the glass ceiling imposed by mortgage lenders restricting home loans, but expectations are exceeding reality for most sellers as sales have plunged 40% since the 2007 boom.

A number of surveys looking at the market all report more activity but less sales. Continue reading House sales 40% down on buy to let boom years


Confidence in housing market is falling, say estate agents Buy to Let News, House Prices, Latest Articles, Property Market News

House price confidence is dropping away as prices fall and buyers melt away, according to estate agents.

One in five estate agents reported drops in April as hopes for future price rises hit the lowest level this year, and some expect property values to keep falling says the latest housing market survey by the Royal Institution of Chartered Surveyors. Continue reading Confidence in housing market is falling, say estate agents


London’s cheapest home is a £41,000 boat House Prices, Latest Articles, Property Maintenance

A garage hitting the market with a staggering £525,000 asking price in upmarket Knightsbridge, West London, has prompted a look for the cheapest homes for sale in the capital.

For homeseekers looking to buy outright, the cheapest home for sale in London is a one bed renovated houseboat in the Paddington Basin is on the market for £41,000, according to online property portal Rightmove. Continue reading London’s cheapest home is a £41,000 boat


Luxury home sales hit new high as rest of market falters House Prices, Latest Articles, Property Market News, Property Sales & Sourcing

Sales of homes worth £2 million or more are rising – and most are in just four upmarket neighbourhoods of London.

Just over half of all multimillion pound home sales last year were in swish Kensington, Chelsea, Westminster or Camden, while 76% (1,161) of £2 million plus sales were in London. Continue reading Luxury home sales hit new high as rest of market falters


Official UK house price data published for first time House Prices, Latest Articles, Property Market News

The first issue of UK house price data from the Office of National Statistics signals the start of a shift towards an official national house price index.

The average house price in the UK for February was £224,473 – down on January’s average of £228,064 but up from £211,960 a year earlier. Continue reading Official UK house price data published for first time


Where are the UK’s property hotspots – and not-spots? Buy to Let News, House Prices, Latest Articles, Property Sales & Sourcing

As property sales fall to their lowest level in three years and threaten to keep on dropping, here’s some research that identifies the remaining property hotspots.

Lloyds Bank tracks property sales in 500 towns and cities across England and Wales – and has revealed that last year, 300 registered a fall in the number of home sales. Continue reading Where are the UK’s property hotspots – and not-spots?


House prices down 1% and may drop further, warns lender House Prices, Latest Articles, Property Investment News, Property Market News

Homeowners face more misery as house prices dropped back for the first time in six months as the stamp duty holiday for first time buyers ends.

The fall signals the start of an expected slow decline in house prices as first time buyers race to complete a purchase rather than holding off until later in the year. Continue reading House prices down 1% and may drop further, warns lender


Free data lifts house price curtain for nosy neighbours Latest Articles, Property Market News

Property investors and nosy neighbours can drill down in to the Land Registry’s house sales data for free under new Government open access rules for public information.

The most expensive property sold in England and Wales was Dorchester Mansions, Ascot, Berkshire, with a price of £135 million – while the cheapest was Chapel House, High Common, Thetford, Norfolk, with a price tag of just £6,000. Continue reading Free data lifts house price curtain for nosy neighbours


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