New £1 billion fund announced for building new homes in England

The Government and Barclays have announced a £1 billion housing development fund to help deliver thousands of new homes across England.

Under the agreement loans ranging from £5 million to £100 million, which will be competitively priced, will be available for developers and house builders who are able to demonstrate the necessary experience and track record to undertake and complete their proposed project.

Funding is open to new clients as well as existing Barclays clients, and will put greater emphasis on diversifying the housing market, as at present almost two thirds of homes are built by just 10 companies.

A key priority of The Housing Delivery Fund is to support small and medium sized businesses to develop homes for rent or sale including social housing, retirement living and the private rented sector, whilst also supporting innovation in the model of delivery such as brownfield land and urban regeneration projects.

‘There is a vital need to build more good quality homes across the country. This £1 billion fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need,’ said John McFarlane, Barclays’ chairman.

Housing Secretary James Brokenshire said that it will see Barclays in partnership with Homes England also help to see more design and innovation introduced to new home building.

‘It is a further important step by giving smaller builders access to the finance they need to get housing developments off the ground. This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market,’ he added.

According to Sir E Lister, chairman of Homes England, the organisation will play a more active role in the housing market and do things differently to increase the pace, scale and quality of delivering new homes.

‘The Housing Delivery Fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England,’ he said.

Brokenshire added that it will move towards the target of 300,000 new homes being built a year by the mid-2020s and that with 217,000 homes built last year, England has seen the biggest increase in housing supply for almost a decade.

Scotland and Midlands Lead Greenfield Land Values Growth

Strong demand from housebuilders driving up cost of land and house prices in the Midlands

An increase in the supply of permissioned land has lead to supressed levels of land value growth, according to the quarterly UK residential development land index by Savills.

Greenfield land values grew by 0.8% in Q2 2018 across the UK, bringing annual growth to 2.7%. The strongest quarterly increases recorded were 2.0% in Scotland, 1.5% in the East (includes East Midlands and East of England), and 1.3% in the West (includes West Midlands and South West).

On an annual basis, greenfield land values were up 4.4% in the West and 4.8% in Scotland, with the index noting that the strong growth in land values in the Midlands has been driven by rising demand from housebuilders.

The reason for the muted growth in land values across the UK, however, is due to a sharp rise in granted planning permissions.

In 2017, over 391,000 new homes had planning permission granted, a 21% increase from 2016.

According to the index, demand for land is also being driven by housing associations competing with housebuilders for land as a result of Section 106 requirements.

Strong house price growth is linked to the rise in land values, with Savills reporting that annually prices in the East and West Midlands are up 5.8% and 6.2% respectively, compared to a 3.9% average across England & Wales.

“Land values are currently underpinned by increased demand and a clear political will to maintain high levels of housing delivery, while rising consents and build costs will temper growth potential,” said Savills research analyst Lucy Greenwood.

“The key to boosting housing delivery will lie in unlocking land in locations linked to the strongest housing markets and to those with the most pressing housing need.”

Interest Rate Rise Results in Drop in Planned Home Moves

Homeowners more concerned with mortgage rates than house prices due to Bank of England decision….

 

The Bank of England’s decision to increase interest rates may have deterred homeowners from moving, according to new research from AA Financial Services.

Throughout 2018, the proportion of adult homeowners planning a move in the next six months had stayed consistent at 8%.

However, in the 48 hours following the interest rate rise by the Bank’s Monetary Policy Committee, this fell to 6%.

The AA’s research analysed future demand for property by tracking homeowners’ intentions to move, including the timescale for the move, how much they planned to spend on it, and which regions they were planning to move to and from.

In its most recent figures, collated in July before the interest rate rise was announced, the AA predicted 2018’s summer would experience a high in property confidence, and expected a notable increase in the number of homeowners planning a move over the coming three months.

It also found that the average planned spend on a new home move jumped to in June, up from recorded in April.

Additionally, the July data revealed that 34% of renters were planning to buy a home in the Summer, up from 28% in the Spring, despite concerns regarding property supply.

Commenting on the figures, David Searle, Managing Director at AA Financial Services, said home movers were now concerned more with mortgage costs than house price trends as a result of the interest rate rise.

“After years of record low interest rates, last week’s rise – and indications that more is yet to come – mean that the cost of buying a home is going to get more expensive.

“Given many people are moving home to save money, release equity or to make their money go a bit further it seems that, for some, the reality of living with rate rises may well temper their plans to move in the short term.”

Interest rate rise UK: Bank of England raises rate to 0.75 per cent in August 2018 – what does it mean for your mortgage?

Around a third of London, borrowers could see the cost of their mortgages rise by hundreds of pounds following August’s interest rate rise.

The Bank of England has voted unanimously to raise UK interest rates to their highest level in almost ten years.

The decision to raise the base rate to 0.75 per cent from 0.5 per cent pushes the Bank rate to its highest level since March 2009.

It is only the second Bank rate rise since the financial crisis in 2008, after a rise in November 2017 pushed interest rates back up from a historic low of 0.25 per cent to 0.5 per cent.

Today’s announcement will come as little surprise after most economists predicted the monetary policy committee’s decision.

The Bank of England raised interest rates today to the highest level for more than nine years

Another interest rate rise of 0.25 per cent was widely expected to take interest rates to 0.75 per cent in May.

However, the disruption caused by the “Beast from the East” that hit this March led to the economy growing by just 0.1 per cent in the first three months of the year and the Bank opted to keep interest rates at 0.5 per cent.

Two more rate rises are expected in 2019 and 2020.

Will I still be able to afford my mortgage after today’s interest rate rise?

“According to Nationwide Building Society, only a third of London borrowers are on variable rates. This means the vast majority of borrowers will see no impact on their mortgage payments have taken advantage of the low fixed rates that have been on offer,” said Colin Payne, associate director at Chapelgate Private Finance.

However, the third of London homeowners on variable rates will see their average mortgage payments pushed up by more than £300 a year as a result of the rise.

Today’s interest rate rise will push up the average mortgage by £26 per month to £1,180, further squeezing household incomes.

 

“In real terms, wage rates are still at levels prevailing in 2005. Moreover, a small proportion of households already have a relatively high debt service burden. For those, some of whom will be on variable rates, any rate rise will be a struggle, even though the impact on the wider economy and most households are likely to be modest,” said Robert Gardner, Nationwide’s chief economist.

That said, while a rise in interest rates may come to a shock to anyone who bought their first home in the past decade, higher mortgage interest will have been factored into lenders’ calculations since new rules were introduced in 2014 to curtail high-risk lending, so don’t panic.

Should I fix my mortgage now?

People on a variable rate mortgage benefit from interest rate changes when the base rate drops. However, mortgage experts agree that today’s announcement heralds a general upwards trend in interest rates.

MarkCarneyinterestratesmortgage.jpg
Mark Carney, governer of the Bank of England, announced the Bank rate rise to 0.75 per cent today (Bloomberg)

This means that borrowers on a variable rate should seek out a new deal now if they can.

“If November’s rate rise was important for its symbolism, today’s rate rise is equally important for its message to the market: the record low interest rate era is over, and interest rates are now headed in one direction,” said Craig McKinlay, sales and marketing director at Kensington Mortgages.

“This rise should be a call to action for those borrowers who haven’t yet remortgaged to get in touch with a mortgage broker and seek a new competitive deal.”

Will house prices go up or down now interest rates have risen?

The 0.25 per cent rate rise may push down already falling London house prices, as the cost of home ownership looks set to rise further.

“It’s not the relatively modest increase in interest rates which is significant – the message it sends about their future direction is far more important,” said London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors, Jeremy Leaf.

“The change is likely to compromise already fragile confidence to take on debt in the property market and wider economy.”

London house prices fell for the fourth month running in May to £479,000, a drop of £2,000 off the value of the average home in the capital.

Prices were expected to continue to decline slightly for the next couple of years due to uncertainty over Brexit, combined with the likelihood of further interest rate rises.

“In our regional forecasts we predict price falls in London in 2018 and 2019 of 1.7 per cent and 0.2 per cent respectively,” said Richard Snook, senior economist at consultants PwC.

East Midlands is Most Confident Region for House Price Growth

Consumer confidence in the housing market has increased by its largest rate since 2016, according to the latest Housing Market Sentiment Survey by Zoopla.

Over eight in ten homeowners (84%) predict house prices in their area will grow by 6.9% over the next six months.

This is a marked increase on the previous survey held in November 2017, when a price increase of 4.9% was forecast by 70% of consumers.

The East Midlands remains the most confident region, with 93% expecting prices to rise compared to 79% in November’s survey, closely followed by the East of England (90%).

Although North Eastern homeowners have the least optimism, market confidence has nearly trebled in the region from 22% in November to 63%. In London, 76% of consumers are anticipating prices in the capital to grow.

However, in terms of the rate at which prices are predicted to rise, homeowners in the West Midlands are the most optimistic, predicting property prices in the region will grow by 10.6% in the next six months.

Zoopla believes that the rise in confidence is a result of wider activity in the housing market, due to a seasonal increase in momentum.

One Third of Millennials Will Continue to Rent in Their Retirement

The number of families with children living in rented property tripled between 2003-2016…

The Resolution Foundation has proposed a series of reforms aimed at protecting tenants and landlords in the private rented sector.

According to the think-tank’s research, half of all millennials – people born between 1980 and 1996 – will be living in rented property up to their 40s, whilst a third are likely to be renting beyond retirement.

Furthermore, four out of ten millennials aged 30 are already renting, double the rate of the previous generation and four times that of baby boomers, whilst the number of families with children lived in the private rented sector has grown substantially, from 0.6m in 2003 to 1.8m in 2016.

Although they acknowledge the policies the government has introduced to make housing more accessible for first time buyers, the Resolution Foundation argues that more needs to be done to provide greater security for those that rely on renting.

This includes short-term measures such as proposals for indeterminate tenancies, which are essentially open-ended leases. Such tenancies are already in use in parts of Europe, including Scotland.

A new tribunal system could also be created, in order to resolve disputes in a timely and cost-effective manner.

Lindsay Judge, a senior analyst at the Resolution Foundation, notes that support needs to be available across all areas of the housing market: “While there have been some steps recently to support housebuilding and first-time buyers, up to a third of millennial still face the prospect of renting from cradle to grave.

“If we want to tackle Britain’s ‘here and now’ housing crisis we have to improve conditions for the millions of families living in private rented accommodation.”

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’s property market is in a coma

London’s housing market has ground to a halt.

After years of blockbuster growth, home prices have reversed course and are expected to drop further over the next year. The number of sales has dropped, and more homeowners are pulling properties off the market.

The dour outlook comes courtesy of the Royal Institution of Chartered Surveyors (RICS), which warned in a report on Thursday that weakness in London had caused its UK house price indicator to hit a five-year low.

A number of factors have hobbled London’s market.

The government has in recent years hiked taxes on property purchases, making it more expensive to buy luxury housing, second homes and investment properties. Doing so has scared off some wealthy investors and caused prices to slump in central London.

Britain’s decision to leave the European Union has also hurt the market, with potential buyers putting their plans on hold because of the economic uncertainty.

One property professional surveyed by RICS said that Brexit and the tax changes had “killed the liquidity of the London market.”

Related: Renting vs. Buying: What can you afford?

The Bank of England is also expected to keep slowly raising interest rates as the economy grinds forward, making mortgages even less affordable for Londoners.

The average house price in London is £486,000, according to the UK Land Registry.

That’s too high for many first-time buyers, whose finances have been hit by high inflation and small salary rises. But sellers would rather pull properties off the market than accept lower bids.

“Buyers and sellers are currently locked in a stand-off,” said Hansen Lu of Capital Economics.

RICS’ chief economist Simon Rubinsohn said that the slowdown in London “has the potential to impact the wider economy, contributing to a softer trend in household spending.”

He said the dynamic could ultimately impact the Bank of England’s thinking about future interest rate rises.

Still, analysts don’t expect house prices to collapse in London. Inflation has moderated in recent months, employment remains strong and the British economy is growing.

Lu said this should be considered “good news” for the stagnant market.

Buy-To-Let Investors Target North West and South East

Two-fifths of landlords are planning to purchase more property in 2018

Landlords in the UK are optimistic that their buy-to-let (BTL) property portfolios will continue to perform well in 2018, despite the challenges the market faces from Brexit-related uncertainty and affordability stress tests.

According to the annual ‘buy-to-let barometer’ by Shawbrook Bank, 65% of investors were confident in their portfolio, whilst just 14% of respondents were concerned.

Growing returns and rising demand were cited as the two primary reasons for the confidence, as 21% of landlords had seen an increase in tenant demand in 2017.

Meanwhile, investor sentiment towards the UK economy is waning due to lacklustre growth and the uncertainty surrounding Brexit, as more landlords in 2017 (42%) expressed concern than in 2016 (33%).

Despite this, appetite for buy-to-let property remains healthy, with 39% of landlords planning to invest in an additional property in 2018, whilst expressing a strong preference for property in the North West and South East regions.

Commenting on the data, Karen Bennett, managing director of Shawbrook Bank commercial mortgages said: “There’s a healthy dose of uncertainty around at the moment, but the BTL market is showing its resilience. Property continues to offer an excellent underlying investment vehicle for professional landlords with the right investment strategy.

“Whilst the investment case for BTL remains strong, there are particular challenges ahead for portfolio landlords and the additional impact of the PRA (Prudential Regulation Authority) changes.

“Landlords now face much more stringent affordability tests and it’s therefore more important than ever than landlords are clued up on their obligations as the market continues to get even more complex.”

Economy wobbles as factories and building sites stall – putting May interest rate hike in doubt

Economic growth slowed again in February as the construction and manufacturing industries both stalled, a pair of oil refineries closed for maintenance, and the export boost from the weak pound began to fade.

The Bank of England had already cut its first-quarter growth forecasts from 0.4pc to 0.3pc because the icy Beast from the East made families stay at home instead of hitting the shops. But now economists fear even this estimate is too high.

The new figures “look consistent with GDP growth slowing to 0.2pc in the first quarter – below the Monetary Policy Committee’s 0.3pc forecast – from 0.4pc in the fourth quarter, casting doubt over whether a May rate hike is as likely as markets currently expect”, said Samuel Tombs at Pantheon Macroeconomics.

 

“We estimate that economic growth nudged lower to 0.2pc in the first quarter of 2018,” he said.

“The main reason for the weakness was severe weather in March, which is likely to have disrupted activity in all major sectors of the economy.”

Manufacturing output fell by 0.2pc in February, the Office for National Statistics said, and January’s 0.1pc expansion was also revised down to zero.

Falling output of electrical goods, machinery, textiles and plastics hit the figures.

Growth in industrial production overall – which includes manufacturing as well as industries such as mining and quarrying, and utilities – slowed to 0.1pc for the month.

A major cause was that two of the UK’s six refineries were closed for refurbishment. However, growth was supported by February’s unusually cold weather, which boosted domestic energy consumption.

Mark Carney at the Bank of England is expected to raise interest rates to 0.75pc next month – but this weaker data could make him think again Credit: Simon Dawson/Bloomberg

At the same time construction output tumbled by 1.6pc in the month, defying expectations of a 0.9pc increase. This drop may not be entirely weather related. The ONS said maintenance work led the decline, even as residential building and infrastructure construction increased.

The trade deficit increased in the three months to February, rising by £0.4bn to £6.4bn, as a dip in imports was more than offset by a larger fall in exports – which the ONS said coincided with a strengthening of the pound.

However, the overall slowdown may only be a temporary wobble, rather than a longer-term slowdown in the economy.

“While a continuation of such news may generate some nervousness in markets about whether the Bank of England will deliver another rate hike next month, it is worth pointing out that there is another full round of economic news before the Bank announces its decision,” said George Buckley at Nomura.

“We continue to expect a 25-basis point move on May 10 on the assumption of better economic news to come.”

Chief economist Lee Hopley at manufacturing industry group EEF said: “The data looks more like a temporary wobble than a turn for the worse. Whilst other indicators may have softened since the start of the year, ongoing growth in the global economy should continue to spur growth across manufacturing in the coming quarters.”

Source https://www.telegraph.co.uk/business/2018/04/11/economy-wobbles-factories-building-sites-stall-putting-may/

Call Smart Invest UK on 0203 637 5844

Rental Rates Increased Nationally by 16% Over Last Decade

East and West Midlands top annual rent increases in Q1 2018

 

Rental growth has remained stable in the first quarter of 2018, the latest Rental Tracker from Rightmove suggests.

 

Excluding Greater London, the average asking rent for all tenures has risen by 0.9% annually, compared with an annual increase of 0.7% recorded in the final quarter of 2017.

 

This comes despite rents being down on a quarterly basis by 0.2% between Q4 2017 and Q1 2018, bringing the average asking rent per month to

 

The East Midlands was the strongest performing region for annual growth, with asking rents rising by 2.6%, followed by the West Midlands (1.9%), Wales (1.8%) and Yorkshire & the Humber (1.5%).

 

In the capital, asking rents for Q1 2018 were down 0.1% year-on-year, but had increased 0.2% from Q4 2017.

 

Looking back on the last decade, the data shows that the cost of renting a two-bedroom home has increased nationally – excluding London – by 16% in 10 years, and 25% in London.

 

“A look at the first few months of this year shows the usual seasonal trend of asking rents falling slightly compared to the last quarter of the last year, but we’re likely to see a rise again next quarter,” Rightmove’s housing market analyst Miles Shipside said.

 

“London asking rents remain flat compared to this time last year, a sign that we are highly unlikely to see the same big increases over the next ten years that we’ve seen in some areas in the capital over the previous ten years.”

Government Announces £400m Housebuilding Investment Fund

The Housing Secretary Sajid Javid has revealed a new government investment fund to help boost housing construction in Greater Manchester, Oxfordshire and the West of England.

Almost million is being put towards building more homes, as well as delivering local infrastructure projects like schools, roads and hospitals.

The fund is similar to the £ 120m grant to build 215,000 new homes in the West Midlands, announced by the Chancellor in the Spring Statement.

Of this, Greater Manchester is set to receive m to accelerate economic growth in the Northern Powerhouse and support the construction target of 227,200 new homes in the region by 2035.

An interim package of 120m will be given to the West of England, which covers Bristol, Bath, and parts of Gloucestershire and Somerset, to nearly double the number of new homes built each year from 4,000 to 7,500.

Oxfordshire will receive the rest of the funding, some m, which will support the construction of an additional 100,000 new homes by 2031, as well as the building of vital bridges, roundabouts and roads.

Meanwhile, the government announced that shortlisting has finished on bids for the bn Housing Infrastructure Fund, with 44 bids for high-impact infrastructure projects successfully progressing to the next assessment stage.

“This government is determined to build the homes this country needs,” Sajid Javid said of the fund. “That’s why we’re working with ambitious areas across England and backing them with investment and support.

“We’re also investing in local infrastructures like schools, roads and hospitals so that we can help unlock even more new homes in the areas where they’re needed most.

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.”