To buy or not to buy a house

To buy or not to buy a house that is the question!

To buy or not to buy a house that is the question !

Over the last five years average city house prices outpace earnings growth making the decision of buying a house harder and harder, especially for the young people who are choosing to live with their parents and put off buying a home until later in their lives.

If your financial situation permits you to think of buying a house, before getting on the property ladder you need to consider some important factors related to where you stand exactly and if renting is a more suitable solution for you at this point.

Given that your planning brought you to the point that you are feeling confident to proceed in one of your biggest purchases of your life, now is the time to take into account some other important factors that you may not think of yet.

Buying a house means that you have thought of settling down, that choice it’s going to be a lifetime decision for you and you must be very careful with the steps that follow.

You need to have enough cash saved for a 20% down payment plus fees. You also have to be sure that your budget can handle along with the mortgage the taxes, maintenance and incidental costs every month!

If you buy a home, you’ll have to pay for:

Deposit

Survey cost

Stamp duty

Removal costs

Legal costs such as solicitor’s fees

Your monthly bills

If you stretch your budget to the limit, you might not have money for Saturday night out dinners, holidays or entertainment.

Your renting time will be over and that means less flexibility. For example, selling up and moving is going to be more expensive as you are going to have estate agency and legal fees to pay.

If you are not prepared for all of these, then you have to wait a little longer until you are ready to deal with all the possible expenses that may come in your way.

Renting a house, especially when you are young it may be the only option with the current financial situation but it also gives you the freedom to pursue possibilities related to your career, as you can easily leave and work abroad without any engagements holding you back. You can try living the urban and the suburban way of life until you find out what suits you best. It can also help you to get to know yourself better so when the time comes you’ll make the best choices for yourself and your family.

buy-to-let investment

UK is the fifth worst country for buy to let investment

buy to let investment

UK is the fifth worst country for buy to let investment

UK has dropped 10 places to 25 and is now the fifth worst country for buy-to-let investment in Europe with yields at an average of 4% while Ireland maintains the highest rental yield (7.08%) in Europe for second year, according to the latest European Buy-To-Let League Table from WorldFirst.

Ireland is once again the top European location for buy-to-let investments, new research by WorldFirst has found. This comes as UK yields fall to 4% putting the country in the bottom 5 for buy-to-let investment returns in Europe.

In the latest European Buy-To-Let League table from WorldFirst, the international payments expert, Ireland’s average rental yield rose to 7.08% from 6.54% in 2016 keeping it at the top of the list. As Ireland’s economy continues its upward trajectory maintaining its spot as one of the fastest growing in the Euro zone, so too does its rental market.

The average rent for a one bedroom apartment in an Irish city has soared to over £12,000 making it the second most expensive country to rent in the EU after Luxembourg which costs city renters over £14,000 per year. And whilst sale prices have seen an increase, these have remained closer to their European counterparts with the average cost of a one bedroom apartment in an Irish city costing over £168,000.

Malta, Portugal, Netherlands and Slovakia emerge as the next European hotspots with yields over 6%. All four countries have relatively low property prices yet rental averages provide an opportunity to earn a decent income.

Meanwhile, the UK’s stuttering rental market is beginning to hit buy-to-let investors with yields falling from from 4.91% to 4% over the past year. The latest findings also come a year after stamp duty changes came into play in the UK, significantly increasing fees for those investing in buy-to-let or purchasing a second home therefore making buy-to-let even less of an attractive investment option.

Commenting on the research, Edward Hardy, Economist at WorldFirst said:

“The correlation between a country’s housing sector and the health of the wider economy is clear. It may now be the case that the deteriorating dynamics of the UK’s rental market is sounding the alarm for a wider slowdown in residential housing and thereby broader economic wellbeing. While the UK remains in a purgatory-like state between EU membership and Brexit, long-term investment decisions have become increasingly difficult to make and falling returns for property investors could mark the beginning of the end for one of the UK’s most successful investment avenues of the past 25 years.”

Source: https://www.worldfirst.com/uk/blog/your-money/ireland-tops-eu-buy-to-let-league/

The number of wealthy individuals in UK continues to increase

The number of wealthy individuals in UK continues to increase

The number of wealthy individuals in UK continues to increase

The number of wealthy individuals in UK continues to increase

The UK saw uneven rates of prosperity growth over the last year, according to the third edition of the annual UK Prosperity Map from Barclays Wealth & Investments.

Against a backdrop of fluctuating economic conditions and Brexit negotiations, the 2017 UK Prosperity Map shows that, while most areas of the country are more prosperous overall than last year, in many cases cities are outpacing their wider region, with clear disparities opening up when it comes to GDP per capita and earnings.

London outpaced by cities in the North and Midlands

While London continues to dominate as the UK’s most prosperous city, other cities saw positive trends over the last year. Newcastle and Birmingham saw the biggest year-on-year increases in GDP per capita, at 4.4% and 4.2% respectively, growth well in excess of the overall UK figure over the same period (1.8%). When it comes to house prices, almost every city has seen higher house price growth than London (up 3%), with Birmingham (8%) and Manchester (7%) seeing the biggest increases.

Birmingham is also booming when it comes to start-up businesses – the city saw the highest business birth-to-death ratio of any in the UK with 1.81 businesses being created for every closure, beating London (1.78). At a regional level, London comes out top, but the West Midlands as a whole also ranks highly with a business birth-to-death ratio of 1.55, possibly indicative of a ‘ripple effect’ from Birmingham at the region’s economic heart.

Newcastle saw the greatest increase in average earnings of any UK city, up 6.3% – but this isn’t reflected in the wider North East region, which actually saw a 0.3% decrease in earnings. This points to the city as an island of growth in a region facing economic challenges.

Dena Brumpton, Chief Executive, Wealth & Investments, Barclays, said:

“The last twelve months have seen fluctuations in the UK economy, and this is reflected in the mixed picture of prosperity growth across the country in this year’s UK Prosperity Map. It’s encouraging to see that people across the country are benefiting from higher earnings and the momentum created by greater GDP per capita.

“The continued economic growth of the UK’s cities is further cause for optimism – but if the current trend of high prosperity growth in cities continues, regions risk being left behind by their flourishing centers. The challenge for businesses and policymakers is to find new ways of bridging this gap and ensuring greater balance in how each part of the UK is sharing in the country’s prosperity.

“We are continuing to work closely with our clients to help them boost their own prosperity, whether that is through investments, savings or planning for retirement.”

1 in 79 Britons is a millionaire

The number of wealthy individuals continues to increase: the UK’s millionaire population grew by 7.6% year-on-year in 2016. Every region saw an increase in its number of millionaires since last year’s research, except Scotland, which saw no change. The East Midlands and South West saw the highest percentage growth in their millionaire population between 2015 and 2016 (11.1% and 10.5% respectively).

Paul Swinney, Principal Economist, Centre for Cities, commenting on the research, said:

“Overall, this year’s UK Prosperity Map shows that the Greater South East is still outperforming the rest of the country economically, based on its ability to attract in high-skilled business investment. While other areas of the country have benefited from falling unemployment, rising prices have softened the positive impact of increased wages. This research illustrates the need for the Government’s forthcoming industrial strategy to address the barriers that currently prevent over parts of the country generating prosperity for their residents that is seen in the south-eastern corner of England.”

Average earnings and GDP per capita increase, supporting prosperity across the UK

Despite uncertainty in the wider economic and political landscape over the last year, several macroeconomic indicators have seen widespread positive growth: GDP per capita  increased in every region and city of the UK, with the North West seeing the biggest increase at a regional level (3%). Average earnings are up in every region except the North East, which saw a small decline, with the West Midlands seeing the greatest rise at 3.9%. Unemployment decreased in every region except Northern Ireland and the South West.

Consumers are saving and spending – rather than investing

A survey conducted alongside the UK Prosperity Map research, shows that the average personal disposable income of UK adults is £281 per month after paying for essentials such as food, household bills and housing costs. When asked what they do with this money, other than spend it on leisure activities, 46% say they are mostly likely to put this into a savings account, 21% spend on necessary purchases, 21% spend on something they want but don’t necessarily need, and 15% spend it on home improvements. Just 12% invest this money into an ISA or pension.

Source: http://www.newsroom.barclays.com/r/3512/prosperity_in_uk_cities_gains_momentum_as_wider_regional

Tenants on universal credit owe

Tenants on universal credit owe £589 million to Landlords

Tenants on universal credit owe

Tenants on universal credit owe £589 million to Landlords

More than a third of private landlords have experienced tenants on universal credit going into rent arrears in the past 12 months, according to a recent RLA survey.

Nearly 1 in 3 landlords reported that they attempted to evict a tenant in the past 12 months, with the majority (60%) reporting this was due to rent arrears, with tenants owing on average £1000 (median).

When extrapolated to the wider sector, this equates to approximately £589 million owed to landlords.

The Residential Landlords Association warns that this is a serious concern, and future changes to the sector could exacerbate this issue, especially the changes to mortgage interest relief.

Regarding the impact of welfare reform, the findings presented a stark account of issues associated with the introduction of universal credit. Of those who let to tenants on universal credit or housing benefit:

  • 38% of landlords reported that they have experienced tenants on universal credit going into rent arrears in the past 12 months
  • This is especially concerning with the finding that on average, landlords were owed £1600.88 in rent arrears
  • 53% of landlords successfully request an Alternative Payment Arrangement
  • 45% of landlords reported that the DWP were unhelpful when contacted
  • The issue of rent arrears for universal credit tenants, is also one of the leading reasons for a landlord attempting to regain possession of the property (64% of landlords)

RLA Vice Chairman, Chris Town, said: “Whilst we continue to welcome the principle of simplifying the benefit system, it cannot be right that as it is currently designed, Universal Credit is leading many more tenants into rent arrears.

“This is not financially responsible and does nothing to encourage landlords to house people needing to claim benefit.

“We have already met with the Minister and are heartened that the department understands the need to address the problem of rent arrears. With just weeks to go before the roll out of Universal Credit gathers pace we need action sooner rather than later.”

Based on these findings RLA calls the government to reform the universal credit, to ensure that it is easier for landlords to claim alternative payment arrangements and to ensure that rent arrears are kept to a minimum. Without these reforms, landlords may continue to be unwilling to provide homes to those on universal credit.

Source: https://research.rla.org.uk/wp-content/uploads/Welfare-Reform-and-Universal-Credit-The-impact-on-the-private-rented-sector-2017.pdf

Rents in London

Rents in London hit record high

Rents in London hit record high

Rental prices in the capital rose to £1,609 last month reaching record high as it was the first time were the average rents in London have been above £1,600, new data from HomeLet reveals.

Rents in the UK rose by an average of 2.4% during August, the highest rate of annual growth seen in the private rental sector this year and this uplift was partly driven by a return to inflation in the London market.

According to HomeLet Rental Index, the average cost of a new tenancy in the private rental market in August was £939, compared to £916 in the same month of 2016.

Outside London, rental price inflation has also picked up, with 10 out of the 11 regions beyond the capital seeing higher rents increasing last month. The average rent on a new tenancy outside London was £776, up 2.3% compared to the same period in 2016.

Commenting on the research, HomeLet’s Chief Executive Officer, Martin Totty said: “Whilst we’ve often observed a seasonal uplift in average rents at this time of year, there’s evidence of a trend now emerging which points to a reversal of the declines seen over the early part of this year. This will be welcome relief to Landlords who have been battered by the perfect storm of tax changes and post-Brexit uncertainties. Whether the trend continues or represents only temporary relief from the headwinds faced by property owners, the remaining months of 2017 should provide the answer.”

Martin Totty added: “Whether the recent strengthening in rents achieved, seen generally across all regions of the country, is driven by more robust demand or by some restriction of supply is hard to judge. Either way, landlords will only be encouraged to invest in property over other assets if they’re convinced they can achieve reasonable returns. If not, then the supply of rental properties could become constrained. Many landlords still face further increases in their costs and so will need to find a new equilibrium between their legitimate required returns and affordability for tenants. It seems the elements in solving that particular equation become ever more complex.”

Source: https://homelet.co.uk/news/article/uk-rents-continue-to-rise-in-August

 

 

Energy Funding for RLA Members

Energy Funding for RLA Members

Energy Funding

The Residential Landlord Association secured £1.5 million of funded works from E.ON to install energy efficiency improvements in members’ properties.

The funding is specifically targeted towards landlords with tenants on benefits whose properties are falling below the required EPC rating.  The works are available subject to a property survey and a benefit assessment. Qualifying benefits include:

  • Pension Credit – Guarantee Credit
  • Child Tax Credit or Working Tax Credit
  • Employment and Support Allowance (Income based)
  • Income Support
  • Universal Credit

RLA landlords can apply for:

  • Free cavity wall and loft insulation (subject to terms and conditions)
  • Funding towards the cost of E.ON installing external wall insulation for solid wall properties
  • Funding towards the cost of E.ON installing a boiler upgrade or replacement, with a range of finance options available to enable members to spread the remaining cost of a new energy efficient gas boiler. ON is a credit broker not a lender.
  • Free EPC and CP12 certification following installation of energy efficiency measures

Measures are subject to terms and conditions. For more information see eoninstall.com

The current obligation period runs until 30 September 2018 and members of the RLA are able to benefit from this offer up to this date.

Anyone who would like to check their eligibility and find out more about which options are available should contact E.ON on 0330 400 1794 or visit the RLA website

Andrew Goodacre, RLA Chief Executive, said: “The RLA is delighted to secure the £1.5m of funded works from E.ON for landlords to install the vital energy efficiency improvements. These funded works will benefit qualifying landlords by easing the upfront costs of improvement works and tenants through reduced energy bills.

“Hundreds of thousands of properties are not currently meeting the minimum standards set to be introduced next April and we would urge any landlords who believe they fit the criteria to get in touch to find out exactly what they are eligible for.”

Nigel Dewbery, Head of Energy Efficiency at E.ON, said: “Whether landlords have in the past been put off by the perceived hassle, expense, or their own lack of knowledge around the subject of energy efficiency, the clock is definitely ticking on the need to improve properties and we’re really pleased to be working with the RLA to support members to prepare for the new legislation.

“In a recent survey, we found over a quarter (28%) of landlords said they feel worried about the cost of making their property compliant. To answer this we’ve developed a range of services to give them the support they need, from online account management that allows landlords to better control their property portfolios through to a range of insulation and heating services to make rented properties more energy efficient.

“We hope working with the RLA will enable us to support landlords with a range of funding options to bring down the costs of achieving the standards whatever measures they require to upgrade their property.”

Source: https://news.rla.org.uk/rla-secures-1-5million-energy-funding-pot-for-members/

The impact of Article 50 trigger

The impact of Article 50 trigger on the property market.

The impact of Article 50 trigger on the property market.

With Article 50 triggered by the British Prime Minister Theresa May, UK is now officially on the truck to leave the European Union but what does this mean for the property market?

UKs withdrawal process that started on 29 March 2017 will last until April 2019. This negotiating period is crucial as it will determine our future trading relationships and the shape of our future economy. Until then we can expect that a certain amount of uncertainty will affect the property market but there are no ominous predictions.

The impact of the Brexit vote last year and the insecurity that followed hardly affected the property market. House prices are still rising across UK and continue to grow in London that may seem more affected but is not especially if you consider the stamp duty changes that came into effect only two months prior to the referendum and the large price tag of either renting or buying a property, two preexisting factors that influence directly and challenges London’s property market.

Mortgage rates haven’t rise after the vote to leave EU, instead they fell. This result is due to Bank of England’s response to cut its leading Bank Rate in August and due to increased competition in the mortgage market, as lenders chased a smaller pool of borrowers.

The number of house sales may show a reduced pace but it will be a short term outcome that will last until the confidence of the investors is boosted again.

The growing need for new homes in order to bridge the gap between supply and demand hasn’t met yet. Estimates suggest that the country is in need of 174,000 new homes every year in order to balance the demand and that is currently an unachievable goal. As a result the shortage in house stock and the urgent demand for homes will outweigh the effects of any uncertainty.

Triggering Article 50 can only bring stability, surely the outcome of the negotiations that already started will define the long term effects of Brexit to the housing market and that’s why it is imperative for the government to deliver successful negotiations that will restore confidence and promote economic growth.

 

homeowners

3.9 million homeowners over-55s are going to downsize

homeowners

3.9 million homeowners over-55s are going to downsize

Nearly half (47 per cent) of over-55 homeowners are planning to sell and move to cheaper homes in later life, according to a new research from Prudential.

The main reason for downsizing is the convenience of running a smaller home in retirement. The nationwide study found that nearly three-quarters (74 per cent) of homeowners rated convenience as their main reason for downsizing compared with just 28 per cent who said they were doing so mainly to release cash for retirement. Meanwhile, just over one in three (34 per cent) said having a smaller garden was a major motivation.

On average the homeowners who stated that they need to release cash for retirement they expect to raise around £112,000 in equity by downsizing with around one in 10 (11 per cent) expecting to make more than £200,000. In fact, more than one in seven (13 percent) said they could not afford to retire unless they downsized.

The study also found that the shortage of homes suitable for retirement, fees and high property prices are the major reasons deterring some older homeowners from downsizing.

The lack of suitable available housing is the main reason over-55s believe downsizing is not more popular – nearly four in ten (38 per cent) blame the lack of suitable houses while 24 percent blamed the cost of moving in terms of stamp duty, solicitors and estate agents, and 17per cent say high house prices put people off.

Vince Smith-Hughes, a retirement income expert at Prudential, said: “It is

interesting to see that these figures challenge the common theory that ‘my house is

my pension’. Although we see a large proportion of those taking equity from their

homes to boost their retirement incomes, most people have accepted that the main

reason they need to move home in later life is for convenience.

“With the average amount of equity raised likely to be just over £100,000, and with

many other demands on this cash – such as helping children, paying off debts and

putting money aside to pay for care in the future – it is clear that for most people the

best way to fund retirement is through saving as much into a pension as early as

possible in their working lives.

“The results also show that many people are worried about that the costs involved in

moving house may eat into the equity they’ll be able to take from their home. Most

people who are considering making major financial decisions, such as selling their

home, in the run up to retirement should benefit from a consultation with a

professional financial advisor and the free guidance on their pension options available from the Government’s Pension Wise service.”

Source: https://www.pru.co.uk/pdf/press-centre/nearly-4million-plan-to-downsize.pdf

 

London Housing Strategy

The London Housing Strategy published for public consultation

London Housing Strategy

The London Housing Strategy published for public consultation

The London Mayor, Sadiq Khan, has published his Draft London Housing Strategy that targets to tackle the capital’s housing crisis.

The publication of the London Housing Strategy draft launches a 3 month consultation process where Londoners can give their input into the strategy.

Eager to build more and affordable homes by 2021, Mayor will also be working with housing associations, councils, institutional investors, and small builders to deal with the housing problems in London.

Building the right number and the right mix of new homes, and addressing the

consequences of the housing crisis are essential parts of the Mayor’s vision for good growth. He wants every Londoner to have access to a good quality home that meets their needs and at a price they can afford.

The Mayor wants to make the capital ‘A City for all Londoners’. That means meeting London’s housing needs in full, particularly the need for genuinely affordable homes and creating a city where businesses can thrive, the environment is protected, and people from all walks of life can share in the city’s success and fulfill their potential.

This vision underpins the five priorities of the Mayor’s draft London Housing Strategy:

  • Building homes for Londoners;
  • Delivering genuinely affordable homes;
  • High quality homes and inclusive neighborhoods;
  • A fairer deal for private renters and leaseholders; and
  • Tackling homelessness and helping rough sleepers.

Mayor, Sadiq Khan said,

This housing strategy is not only about the long-term, but also about doing all we can to help Londoners affected by the housing crisis right now.”

“That is why my new housing strategy sets out an approach that will start to rebalance housing supply in London.

It sets out how we have started to move in a better direction. I have already begun to invest the record £3.15bn of affordable housing funding I secured for London from Government, and I have introduced a new and innovative approach to increase affordable housing and speed up the planning system so that we can pick up the pace of change.

“My housing strategy also outlines my vision for housing associations, councils, institutional investors, and small builders to play a far bigger role – and for City Hall to play a greater part in bringing land forward for building new homes.

It sets out the importance of higher density homes across the city, including in outer London, and more high-quality homes at a stable rent. Above all, it sets out the importance and necessity of building more genuinely affordable homes for Londoners to rent and buy.

Read the full strategy here

https://www.london.gov.uk/sites/default/files/2017_london_draft_housing_strategy.pdf

Respond to consultation here:

https://www.london.gov.uk/what-we-do/housing-and-land/have-your-say-tackling-londons-housing-crisis

 

Conveyancing market activity

Conveyancing market activity dips to four year low

Conveyancing market activity

Conveyancing market activity dips to four year low

Activity in the UK conveyancing market dipped significantly over the second quarter of 2017, as stagnant housing supply and restricted home moving activity pushed total conveyancing volumes down 14% to 210,964 from 245,738 in the first quarter of 2017, according to the latest Conveyancing Market Tracker from conveyancing search provider Search Acumen

Throughout the quarter, the average monthly caseload per firm dropped by 13% from 59 in Q1 to 51 cases in Q2 – the lowest quarterly figure since Q2 2014.

Low transaction volumes were accompanied with another drop in the number of active conveyancing firms during Q2 2017. Using Land Registry data to examine competitive pressures in the conveyancing market, the Tracker shows that the average number of firms active in the three months to June 2017 dropped 1% from 4,198 in Q1 to 4,143. This is the lowest figure on record since tracking began in 2011

Commenting on market trends, Andrew Lloyd, Managing Director of Search Acumen, said:

“The dip in conveyancing activity should come as no surprise to those closely watching the UK property market, but it poses a significant challenge for conveyancing firms that want to survive and grow. We see from our latest statistics on productivity that the conveyancing industry is an increasingly well-oiled machine, but it can only process the transactions the market feeds it.

“The turbulence in the UK’s political system is far from settling as we follow our Brexit path, and it is essential that the property market is safeguarded from continued uncertainty with clear and effective policy decisions. Last time the market was this quiet for conveyancers, we saw major interventions through Help to Buy to support first-time buyers. The fact that second-steppers are now finding life hard suggests there is still much to do to effectively balance the UK housing market – not least addressing the shortage of homes to go round.

“Meanwhile, with fewer customers to play for, competitive pressures are heightening and conveyancing firms face more of a challenge to attract new business. No-one wants to get left behind in the second half of the year and if growth returns after the summer, the biggest winners will be those firms that are ready to leap out of the starting blocks.”

Source: http://www.search-acumen.co.uk/News/Read?Ref=xdHanc