Property News Round-up 13/7/16
Property News All The Latest Updates
Hi guys and welcome to our first property news blog of the month, as usual we will be given you a snap shot of the latest goings-on in the domestic market. This week we look at the Manchester property market and how it is still strong after the Brexit vote to ending our round-up and focusing on landlords setting up companies in order to save tax.
Manchester Property Market Still Strong Despite Brexit
New development plans in the city are not overheating despite recent news of apartment developments that have been given the green light.
New schemes approved in the last few days include Salford council’s approval for a 35-storey tower and a 17-storey tower at New Bailey Street developed by Trinity Riverside Holdings and a 68-storey tower at Owen Street proposed by Renaker. The landmark development will provide 1,508 apartments and penthouses in four blocks of 39, 46, 52 and 66 storeys. (MEN, July 2016)
Natwest’s Heath Thomas mentioned in MEN that consumer confidence will affect demand for mortgages, but the fundamentals in the city’s residential market remain sound because there is a structural shortage of homes across the length and breadth of the country.
Addleshaw Goddard’s, Marnix Elsenaar also added his views in the MEN saying Manchester has all of the ingredients it needs to take forward housing delivery, however, it will need to fight with the central government to be able to deliver the right housing products that cater for the city specifically.
He stressed that it is important to ensure central government policies don’t kill off this growing sector.
Chinese Buyers Look Again at U.K. Property
Due to the recent drop in the pound, many Chinese property investors have started to look at the U.K. market for potential bargains.
The number of so-called leads from Chinese home-seekers for U.K. properties recently doubled according to Juwai.com, a real-estate website based in Shanghai that allows Chinese buyers to browse residential and commercial properties around the world. Leads indicate that a buyer was interested enough in a property to contact a real-estate agent or developer. (WSJ,June 2016)
Manchester in particular has seen a wealth of Chinese buyers and investors. For example, a recent development at Salford Quays, called the Dock Office, just half the apartments were sold to locals. A quarter went to Chinese nationals.
They are not just buying and investing they are also involved in the construction process.
The Beijing Engineering Construction Group is investing £800m in Manchester’s Airport City, which will include a hub for other Chinese firms to set up. President Xi Jinping saw the site in person when he visited last year. (BBC, April 2016)
Now that Manchester has direct flights to both Beijing and Hong Kong also makes it even more easy for potential investors to visit the city and seek long-term opportunities.
Rental Prices Increased in June
Rents kept increasing in the three months to June, but there are signs that the growth in the rental market slowed in the first half of 2016 as compared to last year. (City A.M., July 2016)
According to HomeLet, The average renter in the capital now pays £1,575 per month, up 3.9 per cent on last year. For the rest of the country, renters pay an average £773 per month, which is 3.5 per cent higher than last year.
Barbon Insurance Group’s chief executive Martin Totty shared his views in City A.M. stating : The impact of the EU referendum vote will now play out over the months ahead: if as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain marked; all the more so if more people decide to rent while waiting to see what happens to house prices.”
How Much Will Your House Be worth in 2030?
The average price of a home in England will be more than £450,000 in 2030, according to research from estate agents eMoov.
Their calculations were based on the 84 per cent increase in house prices during 2000 and 2015 and applied it to the next 15 years.
The map (below) illustrates just how dangerous this current artificial inflation of the market could be in the long run (as eMoov’s Russell Quirk mentions in the Daily Mail), it’s not just London (where typical values of £1.9million could climb to £3.4million in some parts), the issue will spread all over the country.
Image Source : eMoov/Daily Mail
Landlords Expected To Set Up Companies To Save Tax
Landlords are increasingly expected to exploit a loophole in the law that allows them to avoid the Chancellor George Osborne’s hefty, punitive tax raid on rental properties, according to a leading mortgage expert. (Landlord Today, July 2016)
Foundation Home Loans‘ commercial director Simon Bayley told the FT that he predicts to see over 75% of mortgaged buy-to-let acquisitions going through a limited liability company (LLC) structure in the next 12 year or so.
In addition, Mr. Bayley believes that many landlords may consider transferring their existing properties to a LLC.
He goes onto mention that if landlords are using income from a current rental they may require help calculating if the capital outlay is affordable for them, even if the long-term benefits suggest to explore the LLC route (also mentioned in Landlord Today).
Mortgage Concepts Associates director Mike Richards agrees with Bayley’s insights, his view is that gradually most lenders who are in the sector will offer this (the 75% or more projection) and premium lenders that are charged for limited company mortgages of around 0.5% will ultimately vanish.
Moreover, he reckons that you will still get a percentage of people who will mistrust the limited company route, but in reality, this is really the only way to go for the future of the buy-to-let market in the UK.
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