Space for 1 million new homes on derelict ‘brownfield’ land, analysis reveals

‘Building on brownfield land presents a fantastic opportunity to simultaneously remove local eyesores and breathe new life into areas crying out for regeneration.’

More than a million new homes could be built on land currently sitting unused across England, according to new analysis.

Brownfield land”, which has previously been built on but is now derelict, could be transformed into vast swathes of housing within the next few years.

The (CPRE) said such measures would regenerate run-down areas without destroying precious stretches of countryside to meet the UK’s housing needs.

As it stands, the government is committed to building 300,000 new homes each year in England to meet demand, and there have been warnings of severe backlogs.

Meanwhile, local groups and green campaigners are concerned about the impact projects such as the massive Oxford-Cambridge development will have on nature and communities. Analysis performed by CPRE using data from Brownfield Land Registers identified over 18,000 sites on which new houses could be built with minimal impact on the environment.

It said two-thirds of this land was ready to be transformed and could begin contributing to the country’s unmet housing needs within just five years.

However, the campaigners said they were concerned with current definitions of “previously developed land” were not comprehensive enough, meaning there could still be a large number of sites being overlooked.

“Building on brownfield land presents a fantastic opportunity to simultaneously remove local eyesores and breathe new life into areas crying out for regeneration,” said Rebecca Pullinger, planning campaigner at the CPRE.

“Councils have worked hard to identify space suitable for more than 1 million new homes.

“But until we have a brownfield-first approach to development, and all types of previously developed land are considered, a large number of sites that could be transformed into desperately needed new homes will continue to be overlooked.”

Research by the group in Enfield identified space for 37,000 homes on sites they identified as a brownfield, 17 times more than official estimates.

CPRE suggested areas including supermarket carparks and “poorly-used industrial or commercial sites” could be regenerated into housing areas with few repercussions.

“The government, local councils and housebuilders, must work hard to bring these sites forward for development and get building,” said Ms Pullinger.

Local Government Association housing spokesperson Martin Tett said: “Councils are committed to bringing forward appropriate sites and ensuring homes are built where they are needed, are affordable, of high quality and supported by adequate infrastructure and services.

“This timely report highlights the availability of sites across the country to deliver enough homes and infrastructure to begin to address the national housing shortage we face.”

Mr Tett said the government must provide councils with the power to speed up developments and set planning fees locally to ensure they are adequately resourced.

Responding to the new analysis, housing minister Kit Malthouse said: “This government is committed to building the homes our country needs while still leaving the environment in a better state than we found it.

“We’re encouraging planners to prioritise building on brownfield land and working with local authorities to ensure sensible decisions are made on where homes get built.”

 


Spring is in the air for the buy to let market in the UK

Spring is definitely in the air for the buy to let market in the UK with some new found optimism after a long period of backlash against Government tax and regulatory changes.
It seems as if many landlords are embracing a business like attitude and getting on with making their portfolios work for them. Indeed, London, Manchester and Liverpool are the most popular cities for buy to let investment in the UK going into 2019, according to new research.
And most landlords are planning to increase their portfolio, the survey commissioned by Experience Invest has found while Nottingham, Leeds, Birmingham and Newcastle are also regarded as good bets for buy to let going forward.
When looking at the types of property that investors were considering investing in this year, the survey also found that houses were top at 67%, followed by flats at 54%, new build residential for 39% and 24% student accommodation.
Overall, just 11% of those surveyed said that they plan to reduce their portfolios in 2019. Some 39% are planning on increasing the size of their portfolio over the coming 12 months, while 35% have no intention of buying or selling any property in 2019 and 15% will be selling some assets to then reinvest in new properties.
It comes at a time when rents are steady. Official figures from the Office for National Statistics (ONS) show that in the private rented sector rents increased by 1.1% in the 12 months to February 2019, up from 1% in January.
In England and Wales rents were up 1.1%, while in Scotland they increased by 0.7% and in London by 0.2%. But, overall, rental growth has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period.
Pressure will continue on landlords to raise rents in 2019, according to Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA). She believes that after filing their 2017/2018 tax returns at the end of January, landlords will be more aware that ongoing changes to mortgage interest tax relief are increasing the financial challenges ahead.
It may mean becoming more business-like or adopting new models. The industry is aware that this could mean offering longer tenancies or even shorter tenancies. In this respect a new study has found that short term rents could be worth considering.
The research from short term letting agency Portico Host found that short term let properties in Walton, Liverpool, are achieving the best yields in the North West at 30.68%, compared to landlords of longer term rentals, who can achieve a yield of 7.88%. The Airbnb yield figure is based on an occupancy rate of 60% of the year, which is typical for these types of properties due to seasonal demand.
While this is not the answer for every landlord it is a model that they might want to look at as they seek to improve and grow their business. They should also be buoyed by research showing that buy to let is still a good investment option beating investing in gold, cash and fine art in the last decade in terms of returns.
Investing in the FTSE 100 would have brought the biggest return when considering the annual capital gain and the percentage yield with an increase of 119%, whilst the value of classic cars is up 94% during the same time period.
However, for those that aren’t professional investors a buy to let property is a very good option, according to the research from lettings inventory and property compliance specialists VeriSmart.
The report says that when considering the annual gain in house prices along with the increase in rental yields, an investment in the sector a decade ago would have brought a 92% return today. This is much higher than the 60% return that investing in gold would have brought and a world away from the 16% increase in cash or the 4% drop in fine art.
It also says that the growth in the property market has been by far the most reliable option with the FTSE 100, gold or cash providing a far more volatile option that is also open to a larger degree of impact from political and economic factors as well as influence from other foreign countries.

Annual house price growth in the UK has stagnated, latest lender index shows

Annual house price growth in the UK has stagnated this month with a rise of just 0.1% to an average of £211,966, according to the latest lender index.

This follows a subdued December when price growth slowed to 0.5% and in January prices were up by 0.3% compared with the previous month, the figures from the Nationwide show.

Robert Gardner, Nationwide’s chief economist, pointed out that indicators of housing market activity, such as the number of sales and the number of mortgages approved for house purchase, have remained broadly stable in recent months.

But he warned that forward looking indicators have suggested some softening was likely. ‘In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of 2018,’ he explained.

‘While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months,’ said Gardner.

He also pointed out that uncertainty is exerting a drag on the market. ‘It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs,’ he added.

Looking ahead, near term prospects will be heavily dependent on how quickly the uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy, especially the labour market, according to Gardner.

‘The economic outlook remains unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single digit pace in 2019,’ he concluded.

 


North-South house price divide to narrow over the next five years

House prices in London have risen by 72% over the last 10 years, leaving little wriggle room to rise further, Savills says.

The North-South house price divide could narrow over the next five years, a report predicts – with property values rising at a faster rate in northern England, Wales and Scotland than those across London.

According to estate agents Savills, house prices across Britain are expected to increase by 14.8% from 2019 to 2023. That would add about £32,000 to the average house, valuing it at £248,000 by the end of 2023.

While house prices in London are expected to rise by 4.5% between 2019 and 2023, the rest of the country could see double-digit growth. House prices in the North West are expected to rise 21.6%, Wales will see a 19.3% increase and Scotland will see 18.2% growth.

Savills believes stricter mortgage lending rules introduced following the financial crisis will limit house price increases – but new mortgage affordability rules will also help to protect the housing market from prices nosediving.

Lucian Cook, Savills head of residential research, said: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.

“That legacy will limit house price growth, but it should also protect the market from a correction.”

London, which has been seen as the engine of the housing market recovery, has seen house prices soar by 72% over the past 10 years – well ahead of any other region.

This leaves less wriggle room for house prices there to keep pushing upwards as people stretch their mortgage borrowing.

The report said that, outside London, key regional economies including Manchester and Birmingham which attract both local buyers and investors have the capacity to outperform their surrounding regions.

Here are Savills’ forecasts for house price growth between 2019 and 2023. Based on figures from Nationwide Building Society’s house price index, Savills has also calculated what the average house price could be by the end of 2023 if its projections for house price growth are correct:

:: North East, 17.6%, £147,100

:: Yorkshire and Humberside, 20.5%, £193,117

:: North West, 21.6%, £197,717

:: East Midlands, 19.3%, £222,392

:: West Midlands, 19.3%, £227,394

:: South East, 9.3% (within the South East, house prices in the outer areas including Brighton and Hove, Milton Keynes and Aylesbury could reach £305,885; and those in the outer London area which includes Reading, Slough, St Albans, Windsor and Maidenhead could reach £398,190)

:: East Anglia, 9.3%, £249,958

:: London, 4.5%, £489,628

:: South West, 12.6%, £276,359

:: Wales, 19.3%, £184,773

:: Scotland, 18.2%, £176,308


Budget was all about buyers with nothing for landlords or tenants

It was never going to be a Budget for landlords and many in the industry will be disappointed that nothing was done to boost the flagging private rented sector where demand continues to be more than the supply of homes to rent.
The overwhelming message from the announcements, or perhaps lack of them, is that the Government still sees the UK as a nation of home owners and does not acknowledge that the rented sector is vital to the housing market.
There was good news for first time buyers in terms of a reduction in stamp duty for those opting for shared ownership and an extension of the Help to Buy scheme to 2023 but with conditions.
There is little doubt that the private rented believes that the Chancellor Philip Hammond failed to address the concerns of landlords in his Budget and the lack of positive change could drive more to sell up.
Those working in the sector have pointed out that many buy to let landlords have sold up due to a restrictive tax regime introduced in the last couple of years, including the extra 3% stamp duty on additional homes.
They are also warning that while the announcement that lettings relief will be cut and the Capital Gains Tax exemption period reduced to the final nine months of ownership, could adversely affect some landlords.
From April 2020, lettings relief will only apply in circumstances where the owner of the property is in shared occupancy with the tenant, in other words it will be abolished for non-resident landlords, selling properties they had previously lived in while the final period exemption is also set to be reduced, from the current 18 months to nine months.
Although cutting lettings relief might see more properties coming up for sale, the rental market will be the loser at the end of the day but the biggest blow is perhaps the lack of recognition that there is a direct relationship between financially squeezed landlords, many of whom struggle to invest in their properties, and tenants struggling to find homes that are fit for purpose.
Whilst the Chancellor again outlined the Government’s desire to boost home ownership, he failed to address the needs of the millions of people who cannot or do not want to buy. Those who do rent and do want to buy still struggle to save for a deposit at a time when rents are rising.
Indeed, the latest figures from Rightmove show that average asking rents outside of London have reached over £800 per month for the first time, fuelled by fewer available rental properties for prospective tenants to choose from.
Rents increased by 0.8% in the third quarter of 2018, the biggest jump recorded at this time of year since 2015 and at the same time there are 8.7% fewer rental properties available compared to this time last year and in London the number of available rental properties is down by 19.4%, with agents finding tenants four days quicker for landlords’ properties than a year ago.
Rightmove says that the continuing trend of fewer landlords purchasing buy to let properties has led to record high rents and a lack of available rental properties this quarter, increasing competition among many prospective tenants looking for the right home.
While the exit of landlords from the private rented sector is a combination of factors you cannot help but think that the Budget did not just do nothing, it just ignored landlords and that will have an impact down the line.
Author Gary Lawson
Smart Invest UK
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