Property News Round-up 25/10/16
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Hi guys and welcome to our property news round-up, as usual we give you a quick snapshot of the latest goings-on in the property world. This week we start by looking at property rentals will outstrip property sales in 2017 to focusing on planning approvals in the Northern Powerhouse and London. Missed our last blog news round-ups? If so, catch up here.
Property Rentals Will Outstrip Property Sales in 2017
Forecasts have suggested that 2017 might be the first year in eight decades where property rentals will outstrip property sales.
Johnny Morris, research director at Countrywide, mentioned in a recent Guardian article : “As some would-be buyers and sellers sit on their hands, Brexit-induced uncertainty has continued to boost the rental market … September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends 2017 could be the first time since the 1930s that more homes are let than sold.”
A sobering thought – homeownership levels had fallen to their lowest levels in 30 years at the start of 2016, although recent figures from mortgage lenders showed a pick-up in the number of loans taken out for house purchases, the number of homes for sale remains near a record low and prices are rising. Recent events such as Brexit uncertainty as well as a lack of supply has also contributed to the dip.
Being able to get onto the property ladder is becoming even more difficult for first time buyers with prices going up steadily.
However, that’s only the beginning.The 3% stamp duty surcharge that the government introduced back in April has led to a boom in buy-to-let purchase, the ramifications have led to a bigger amount of rental properties available to tenants.
The rental market has grown at such a rapid rate that the property industry needs to start focusing on offering the right kind of property for an array of people from millennials to retirees. Many commentators have mentioned that the industry needs to move away from traditional small portfolio landlords renting out their old home to a more professional approach offering tenants the best value and services available.
UK Rents Growing Fastest in Manchester
Rental rates have risen by 7.1% in the north-west city over the last 12 months, as more investors turn to Manchester in search of the highest yields. (Select Property Group, October 2016)
The Northern Powerhouse city was named last year by HSBC as the city with the highest yields in the country. A recent report from Countrywide outlines that rents in the UK are now rising the fastest in Manchester.
At a national level, the rate of growth in the 12 months to September 2016 was 2.2% (last year it was at 2.8%). However,in Manchester, the rent growth rose by 7.1%, more than any other city in the UK. In addition, it’s also worth noting, of the 20 largest cities in the UK, the five which recorded the largest rental rate rises were in the north and Scotland, including York, Glasgow and Liverpool.
In contrast, the south paints a different picture, for example, London and Cambridge had the highest proportion of landlords cutting monthly rates in the last year.
Both domestic and international investors are turning to Manchester to find a property asset that can deliver a strong and sustainable income.
Johnny Morris, research director at Countrywide (who we mentioned in the previous news item) mentioned that there’s a different type of two speed rental market that’s emerging, with falling stock and growing demand driving rental growth in many northern cities at a higher rate than those in the south.
Reasons Why Build-To-Rent is The Future of Rented Living
This news item links with the first – in a nutshell, a new sector and product that’s on the horizon and one that syncs very well with a tenant’s lifestyle and eliminates compromise – I’m of course referring to build-to-rent.
So why is build to rent the future of renting? Firstly, build-to-rent has been constructed with today’s end-user in mind. Ideal amenities such as gyms and communal cinema rooms in the same building. Locations in the city centre close to friends and employment hubs are ideal for the likes of millennials.
A key point about build to rent that it creates a community. Having these build-to-rent apartments slap bang in the city attracts people with similar jobs and interests, with friendships and an array of activities, tenants will want to rent for a longer period.
To simply put it, it just makes sense. Tenants want it, the government agrees with the build-to-rent idea, and investors too want a slice of the share too.
Demand for rental accommodation has increased by over 17k per month over the last decade, as more people move away from homeownership and turn to the private rented sector instead. As mentioned in the first news item, with property rentals looking to outstrip property sales next year, build-to-rent is more than likely to become the number one rental product in the UK. It’s therefore an investment opportunity that cannot be ignored.
A Brief Look At China’s Passion For Foreign Property
Many real-estate agents and property experts in east Asia believe a new wave of investment is just getting under way, as mainland investors develop a taste for international real estate, including postcodes up and down the UK. (The Guardian, September 2016)
When it comes to buying property, Chinese investors look at four main motivations: investment, lifestyle, emigration and education. Many seek a foothold in the UK and hope their children will go on to study at university.
In addition, cities such as London are seen as a secure place to store money that investors want to move out of China, to guard against the devaluation of the Yuan. It’s known that people in mainland China want to get their money out. They therefore use cities such as London as a safe-haven to store their hard earned cash.
However, it’s not just London, investment is now heading north and Chinese investors and hungry to invest in the likes of Manchester and Liverpool.
Manchester for example has had a lot of interest from China when president Xi Jinping visited the city last year to lend his support to George Osborne’s “northern powerhouse” project during his first state visit to the UK.
Since 2014, Chinese investors have been rushing to buy houses in the UK, the high rental yields and stable property prices have been key driving factors.
Also, the UK is very attractive to Chinese property investors because it does not have the high duties that have been introduced in countries such as Canada and Australia for foreign buyers.
Property industry commentators argue that foreign investment from countries such as China is helping to transform urban centres around the globe, they mention that it’s the only way to finance affordable new homes in cities such as London.
They also see foreign investment beneficial for helping to create jobs, improve infrastructure, and in general making the quality of life better.
However, London mayor Sadiq Khan has warned against the capital’s homes being used “as gold bricks for investment”, and has spoken out over how some new developments are given to foreign investors before locals.
Khan mentioned back in May that he sees no point in building homes in the capital if they are bought by investors from the Middle East and Asia.
He stressed that he didn’t want homes being left empty. He emphasized that he doesn’t want London to be the world’s capital for money laundering and wants to give first dibs to people who live in the capital.
Northern Powerhouse Outstrips London for Planning Decisions
New research shows that local planning authorities in the Northern Powerhouse deliver 22% more planning decisions per resident than those in Greater London.
Research published by the British Property Federation and GL Hearn revealed that 25 boroughs in the Northern Powerhouse made 11 major planning application decisions per 100,000 residents in comparison to nine decisions per 100,000 residents in the Greater London area.
Melanie Leech, chief executive of the British Property Federation, said: ‘It is really encouraging to see the North live up to its ‘powerhouse’ moniker, and to be powering ahead with its development pipeline. The development industry has an important part to play in ensuring growth across the country, and it is good to see that there is lots of activity in the North West. (LocalGov, October 2016)
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