Number of Build-to-Rent Homes Under Construction Up 47%

The number of build-to-rent properties either completed, under construction or planned has risen significantly across the UK in the past year.

Analysis by Savills, commissioned by the British Property Federation (BPF), reveals there were 117,893 build-to-rent homes recorded across all the stages of development in Q1 2018; a 30% increase on Q1 2017.

Completions, as well as build-to-rent homes under construction, have grown substantially by 45% and 47% respectively, whilst properties in the planning stage have increased by 19%.

Of all the new build-to-rent homes either completed, under construction or planned, 60,530 (51%) are in London, followed by 29,600 in the North West (25%), and 13,009 across the Midlands and Yorkshire & the Humber (11%).

Ian Fletcher, the director of real estate policy at BPF, commented: “The build-to-rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.

“Policy is also adapting, as to date the sector has grown without a planning blueprint. This is now changing. With the draft revised National Planning Policy Framework, local authorities will now have to specifically identify how many new rental homes their respective areas need.”

Meanwhile, Housing Minister Dominc Raab said: “The 45% increase in completed build-to-rent homes is good news, but we’re restless to do more.

“Our revised National Planning Policy Framework is a crucial next step in supporting the build-to-rent sector, reforming planning rules, and helping to deliver 300,000 homes a year by the mid-2020s.”

Recent analysis from Landbay revealed that rental payments across the UK amount on average to 52% of a household’s disposable income.

Extent of North-South Renting Affordability Gap Revealed

Households outside London spend an average of just over half their income on renting…

Households renting in London are putting a significant percentage of their income towards rent compared to the rest of the country, according to new data from Landbay.

Annual rental growth in the UK, excluding London, rose to 1.21% in March, bringing the average monthly rent to outside the capital.

In London, the average monthly cost of renting is more than double the national average, at 2100

However, the average disposable income for a worker in the capital is per 2455 month. As a result, 89% of their take-home pay is used on renting.

Outside the capital, rental payments amount to just over half (52%) of the average disposable income, which is per 1760 month.

In England, renters in the North East have the lowest percentage (41%) of their incomes going towards rent, followed by Yorkshire & the Humber (43%), the North West (44%) and the East Midlands (44%).

“Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London,” notes John Goodall, CEO and founder of Landbay.

“Not a day goes by when there isn’t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them.

“With the right property and the right location, there are attractive yields to be had, and consistent rental demand will drive returns in the long-term,” Goodall concludes.

 

London property market moves out of boom phase, says Rightmove

The capital’s housing market lagged the rest of the UK in 2017, and there’s little to suggest any upturn is in store

London’s property market has moved out of its boom phase, and home sellers need to be more realistic about their price demands, according to Rightmove.

The February report from the home-listing website shows that asking prices were down 1 per cent from a year earlier, a sixth consecutive fall. They rose 4.4 per cent on the month, reflecting the usual jump at the start of the spring season.

The capital’s housing market lagged the rest of the UK in 2017, and there’s little to suggest any upturn is in store. Still, while multiple reports point to a cooling in London housing, the damage is being limited by cautious sellers, who aren’t flooding the market in a panic to dump property.

That means the long-running supply-demand imbalance in the city is providing some support to prices.

“End-of-the-boom prices normally readjust more quickly if there is an oversupply,” Miles Shipside, Rightmove director, said in the report. However, “some would-be sellers are holding back, preventing a glut of competition from forcing prices downward,” he said.

The capital’s housing market lagged the rest of the UK in 2017, and there’s little to suggest any upturn is in store. Brexit uncertainty has damped demand, while years of rampant inflation has pushed ownership out of reach for many.

The mean asking price in London this month was almost £630,000, more than 20 times average UK earnings.

For those who need a fast sale, Shipside’s advice is to “sacrifice some of the substantial price gains of the last few years.” The average time to sell a property in London is now 83 days, up from 73 days a year ago.

Nationally, asking prices increased 0.8 per cent in February from January, though that was below the 10-year average for the time of year. The average price of £300,000 is up 1.5 per cent year-on-year. That compares with gains of about 6 per cent seen less than two years ago.

The 10 UK areas where house prices rose the most in 2017

UK house prices:Cambridge and Orkney see the biggest average price growth across the UK

New figures reveal the districts where house price growth outperformed the rest of the UK last year.

Property prices in Cambridge have risen by £63,000 in a year, according to the first detailed report on how much homes sold for in 2017.

Annual house price growth of 15 per cent takes the average price of a home in the university town and surrounding areas to £462,000.

Meanwhile, with prices across the UK rising by five per cent to average £227,000, the pace of growth in Cambridge is three times higher than the national average, according to the Office for National Statistics (ONS) report.

Last year, the government committed to a £7 billion investment programme in the city which is set to bring new roads, rail links and homes between Cambridge and Oxford.

“There is lots of talk about the Oxford-Cambridge corridor becoming England’s own Silicon Valley. Faster rail links for London workers is music to many home owner’s ears as the exodus from London continues,” says Michael Houlden, head of national estate agency at Strutt & Parker in Cambridge.

He reports that the proportion of buyers from London in the area rose by 60 per cent last year.

cambridgehp.png
£475,000: this three-bedroom detached house is between Cambridge North and Cambridge stations with easy access to the A14

THE UK’S TOP 10 FASTEST RISING LOCAL AUTHORITIES IN TERMS OF HOUSE PRICE GROWTH:

Local authorities Av. house price Dec 2017 Av. house price Dec 2016 Av. growth
Orkney Islands £146,842 £124,256 18.20%
Cambridge £462,033 £399,330 15.70%
Eden £206,713 £179,676 15.00%
West Dunbartonshire £109,293 £95,081 14.90%
Kettering £203,237 £178,200 14.00%
Cotswold £394,405 £346,150 13.90%
North Norfolk £258,580 £227,473 13.70%
Oadby and Wigston £215,417 £189,806 13.50%
Forest Heath £223,407 £199,385 12.00%
Dover £246,887 £220,776 11.80%

ENGLAND

Other areas with double-digit growth were Eden, just outside of the Lake District National Park, where an average house now costs £206,000; Kettering in Northamptonshire with average prices of £203,000; and the Cotswolds in south-central England.

An average of £48,000 was added to Cotswolds residences over the course of 12 months, taking the average price to £394,000 in December last year.

For this price, buyers seeking their own slice of Cotswolds charm can stretch their budget to a three-bedroom house with exposed beams and an Inglenook fireplace.

costwoldshp.png
£400,000: this Grade II-listed, three-bedroom house is in the historic hamlet of Churchend.

“The Cotswolds remained a firm hotspot last year as it continued to attract strong levels of demand from buyers looking for a change of pace and lifestyle,” says William Leschallas, director of Jackson-Stops’ Burford branch.

Widely regarded for its beautiful countryside and picturesque villages, the area is proving popular with young professionals commuting to Cheltenham, Bristol and Bath, Birmingham and Oxford, as well as families and downsizers.

“We expect demand to continue over the coming years, but whether or not supply can keep pace is yet to be seen. There are a number of larger property schemes in the planning system on the edge of major Cotswold towns, which may appeal more to local buyers who wish to remain in the area as their needs change,” says Mark Johnson, residential development partner at Knight Frank.

SCOTLAND

Homeowners in The Orkney Islands, off the north-east coast of Scotland, saw the biggest growth in percentage terms, with average prices rising by £23,000 (18.2 per cent) to reach £147,000.

For this, home owners can buy a dreamy two-bedroom house with sea and farmland views.

orkneyhp.png
£155,000: a two-bedroom house in Orkney

“The romanticism of a secluded island life, coupled with an affordable price tag, has no doubt made the islands impervious to the negative market influences of the mainland. Although it is also likely that the Orkney Islands’ explosive growth is no doubt a tad skewed to a smaller sample size than most other areas of the UK,” says founder of Emoov Russell Quirk.

There are also generous grants available to businesses setting up in the area, which will be attractive to qualifying entrepreneurs.

Scotland’s West Dunbartonshire also made it in to the top five performing areas in terms of house price growth. With an average house price of just £109,000, it is nearly £20,000 cheaper than nearby Glasgow and nearly £70,000 cheaper than Stirling, boosting its appeal.

WALES

Newport was the standout area in Wales for price growth, with homes selling for an average of £168,000. However, growth of 9.6 per cent puts the region outside of the UK’s top 20 performing areas.

newporthp.png
£169,950: a semi-detached three-bedroom home for sale in Newport

“Over the last few years, Scotland and Wales have seen property prices fall due to influences other than the wider uncertainty surrounding our departure from the EU.

“Both countries are home to pockets that have seen a drastic decline in the local property market, as the result of diminishing industries which have previously been pivotal to the local populace and economy,” says Quirk.

“However, with a much lower cost of getting on the ladder than the majority of regions in England, both have benefited from a greater degree of buyer and seller confidence, which has returned at a much quicker rate than other more inflated markets.”

Decade-High Number of First-Time Buyers in 2017

25,000 more first-time purchases in 2017 than 2016

First-time buyer numbers rose by 7.4% in 2017 compared to 2016, according to recent figures from UK Finance, the trade association for banks and finance firms.

 

According to the association, approximately 365,000 first-time buyer purchases were made throughout the last year, exceeding 2016’s total by more than 25,000 and reaching the highest level for a decade.

 

The report also revealed that the average age of a first-time buyer in the UK now stands at 30, whilst the average income of those taking their first step onto the property ladder was now

 

Last November, the Chancellor, Phillip Hammond, utilised the Autumn Budget to introduce the abolition of stamp duty land tax on the first of any property purchased by a first-time buyer, with the surprise move helping to boost activity in the final month of 2017.

Furthermore, interest rates remain historically low despite rising in November to 0.5%, although the Bank of England has indicated that rates may increase earlier than they originally intended.

Paul Smee, head of mortgages at UK Finance, believes that low mortgage activity will moderate the market in 2018: “2017 saw the number of first-time buyers reach its highest level in a decade, which is welcome news for those getting started on the housing ladder.

“But although the market remains competitive there is no room for complacency, with weaker December figures consistent with our market forecast of subdued growth this year.”

The Price of Land Rising Fastest Across the North

Growth in UK house prices is gaining momentum, driven by flourishing northern regions,

In their latest residential development land report, Savills predicts that property values in Scotland and the North of England will increase by 17-18% over the next five years – surpassing the UK average house price growth of 14%.

As a result of such strong performance, land costs across these northern areas are also due to rise exponentially, says Savills.

In particular, the value of greenfield land is expected to outstrip the national average of 1.7%, rising by 4.2% in Scotland and 2.7% in the North of England.

According to the estate agency, unlike many cities in the south, such as London, northern regions have yet to face affordability constraints – leading to greater opportunities for growth in these areas.

Furthermore, Manchester is seen as the leading driver of this trend, as house prices in the city rose by 8.6% in the year to October 2017 – more than double the national average of 4.2%.

Consequently, Manchester’s urban land prices have also seen significant increases, surging by 24% in 2017, compared to just 4% in the UK as a whole.

Also contributing to rising land values across the country is an increase in competition for land between large builders, medium-sized builders and housing associations, suggests the report

5% City House Price Inflation Predicted for 2018

Latest index reveals previously struggling cities reporting highest house price inflation

 

Since 2009, the cities which reported the weakest house price growth are bouncing back, recording the fastest rate of price inflation.

According to the latest UK Cities house price index from Hometrack, city house price inflation increased to 6.3% in November 2017, compared to 4.9% in the previous year.

Cities in Scotland are showing the strongest price growth, with Glasgow (7.9%) and Edinburgh (7.6%) taking the top spot. Also above the 7% mark are Leicester (7.5%) and Birmingham (7.3%).

For 2018, Hometrack predicts city house prices will increase by 5%, spearheaded by regional cities as London continues to struggle.

“A year ago, we predicted that UK city house price growth would be 4%,” the report notes, “as a continued recovery in regional city house prices would offset very low nominal growth in London.

“We expect 2018 to follow a similar pattern.”

London continues to weigh down on property prices, with LSL Property Services/Acadata’s house price index reporting annual house price growth in the UK was 0.9%. Excluding the capital and the South East this figure rises to 3.3%.

Borrowing Hits Highest Levels in Almost a Decade

Remortgage lending exceeded all of other types….

According to figures release by the Bank of England, households in the UK are borrowing at the greatest rate since 2008.

Analysis show new mortgage lending in the three months to September stood at 81 billion – an increase of 14% year-on-year.

The growth was driven by a race to beat November’s interest rate rise, when the cost of borrowing surged for the first time in a decade, from a rate of 0.25% to 0.5%, particularly among people remortgaging their homes in order to lock in cheap deals.

Despite the government introducing incentives to first-time buyers (FTB), such as the Help-to-Buy scheme, demand for financial products from this group fell in the three months to September.

The number of mortgages extended to FTB dropped over this period, in fact, with their share of lending of the overall market slipping one percentage point to 21%.

Figures also revealed a fall in buy-to-let mortgages, currently at the lowest level seen since 2013, following measures to curb this type of lending launched by the government in recent years, including rises to stamp duty.

UK Private Property Value Rises Nearly 50% in Last Decade

Whilst decade of growth is highest in London and the south, occupancy rates in the capital remain low

Over the last decade, the value of the UK’s private residential stock has grown by trillion, with over half of it concentrated in London and the South East.

This brings the total value to over tn for the first time, an increase of 48%, according to recent research by Halifax.

2017 alone saw an increase of billion, putting the average value per household at compared to the 2007 average of 290k

Unsurprisingly, the southern regions owned the majority of the private property wealth; 68% ( 5tn) in 2017, up from 62% in 2007.

Of the 3tn raised in the last decade, 55% was concentrated in London and the South East.

However, homeownership is becoming increasingly difficult in the capital; with average house prices soaring 71% since 2007 to owner-occupancy rates are as low as 48% in London.

The UK owner-occupancy average, by comparison, is 63%.

Russell Galley, managing director at Halifax, said: “While more than a fifth of total property wealth is in London, lower levels of owner occupation reflect a major barrier to the property ladder with a far great number of people renting where house prices are at their highest.”

With high prices impacting occupancy and affordability, Savills reported last week that the southern regions are likely to see modest house price growth compared to areas like the North West.

House Prices Forecast to Rise in 2018

Independent advisory body expects increase is a result of Stamp Duty Land Tax changes

House prices in the UK could rise by as much as 0.3% over the course of 2018, according to recent figures following the Autumn Budget announcement.

The Office for Budget Responsibility (OBR), which exists to prove independent analysis and forecasts ahead of the Budget, believes the move to abolish the tax on properties valued up to 300k will only benefit existing homeowners and not the first-time buyers it was designed to assist.

Removing the tax is expected to create a surge in demand, which would give sellers the advantage as they could raise their prices as their property becomes more desirable, cancelling out any money buyers may be saving from the tax change.

Miles Shipside, the director for Rightmove, believes this will be the case, saying ‘First-time buyers should think twice about acting quickly to take advantage of this stamp duty ban.

‘The extra demand it creates pushes up prices and starts eating away at the extra cash this stamp duty exemption will free up.’

Elsewhere in the Budget, the Chancellor promised 3bn to small and medium sized house builders in order to meet the government’s new target of 300,000 homes a year.

North West set to Lead House Price Growth in the UK

House prices set to surge in the north, while the south falls behind

The North West of England is set to see the strongest house price growth over the next 5 years, according to a report by leading estate agent Savills, with prices projected to rise by 18.1% between 2018 and 2022.

The region is followed by the North East and Yorkshire & Humberside, where prices are expected to increase by 17.6% in both areas – surpassing the UK average of 14.2%.

On the other end of the spectrum, southern regions are likely to see a more modest growth, as affordability continues to be squeezed in these areas.

The East of England and the South East are both projected to see a rise of 11.5%, while London will only see a small increase of 7.1% by 2022.

According to the company, the next five years is expected to follow the typical market cycle, where a more modest growth in London often leads to a surge in momentum for the North West and the North East.

With these areas being more affordable than the capital, they are more likely to attract first time buyers looking to put down a smaller deposit and avoid a large stamp duty bill.

Rents are generally also more affordable in these areas, compared to the south, which increases the possibility of retaining more graduates in the regions and, in turn, the demand for rental properties.

Commenting on the report, Lawrence Bowles, Associate at Savills, said:

‘Affordability in the capital is already more stretched than the rest of the UK, putting a brake on growth. But areas beyond the Home Counties have potential for growth: incomes have grown more in line with house prices, aiding affordability.’

House Price Growth Highest in North West

UK annual inflation in September up 0.6% compared with August, while London prices decline…

The ‘north-south divide’ seems to be diminishing, as London’s house price growth continues to lag behind the rest of the country.

 

The north west of England continues to dominate, with a 7.3% rise year-on-year according to the September house price index by the Office for National Statistics (ONS).

 

By comparison, the capital saw growth drop by 0.2% since August to just 2.5% year-on-year.

 

As a whole, the UK experienced an annual price increase of 5.4%, up from 4.8% in August.

 

This is a much faster rate than what has been reported in other recent house price indices; 2.5% according to Nationwide, and just 1.4% announced by Rightmove.

 

Buy-to-let investors are turning away from the capital and Jonathan Hopper, manging director of Garrington Property Finders, believes economic growth in the north and higher yields are a possible cause.

 

“In the 12 months to September, prices in the capital rose at barely a third of the pace of those in the fastest-growing region.

 

“This shift is being driven by a steady flight of equity from London – and other previously overheated regions – to areas with greater affordability.”

Empire Property Holdings 3 – Empire Property launch a third loan note

Following on from the success of the first two Loan Notes.

Business Strategy

The Company intends to use the funds raised, to acquire suitable commercial properties, and strategically renovate and manage these assets to achieve the guaranteed returns.

Investment will provide a double digit return on investment, and allow investors to benefit from opportunities in the real estate market without management commitment or concentration of investment in any one property.

Once converted, the properties would become a commercial asset, whose underlying value whilst linked would not be reliant on the variable housing market price index.

The Company plans to take full advantage of current market conditions and acquire assets through the following methods:

  • Initially acquire three commercial properties in prominent towns or Cities
  • The funds will be used to acquire & develop the property into residential accommodation.
  • The properties will be renovated using permitted development rights where possible, or the equivalent full planning requirements.
  • The Company will then liaise with known private, and council letting contacts, to speedily let and manage rooms.

The cost of every project and every future project can be standardised to provide a business plan for each property. The details of each potential project will be input into a feasibility spreadsheet and the viability can be quickly assessed.

The main factors affecting the project are the purchase price of the property and the cost of renovation. Each room is given an average cost to complete, which takes into account all aspects of the renovation, project management, administration, licensing, and liaison with councils.

The only other factor is the purchase price of the room and therefore in each case, we can identify the purchase price of each room that should not be exceeded.

For further information about our track record please see our Done Deals.