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Estate Agents & Letting Agents in Leeds

Here you will find the latest Hudson Moody Wass and property news.

Confidence in buy-to-let market slips due to tax hikes

Recent changes to tax for buy-to-let property has dented confidence among landlords with new research showing many are set to revise their situation and implement new strategies, with some consolidation expected among smaller investors.

The sixth edition of the Kent Reliance Buy to Let Britain report has launched revealing that just 41% of buy-to-let landlords currently hold a positive outlook for their portfolios, down from 67% three years ago, as investors face the prospect of higher tax costs and weakening property prices.

Higher costs are leaving many landlords with little alternative but to increase rents, which now stand at an average of £889 per month across Britain, up 1.9% year-on-year, according to the research.

Kent Reliance forecast that rents will rise further as the mortgage tax changes bite, with one third of landlords expecting to increase rents in the next six months, compared to just 3% who expect them to fall.

With rents rising, and house prices falling in the past two quarters, yields have edged up to 4.5%.  Across the PRS, steady growth in the number of households and monthly rents means landlords are collecting a record £4.9bn per month in rent.

 Overall, the value of the sector has risen by £68bn in the last year, climbing to a record of £1.3trn, up 5.5% on annual basis, although this is just half the level seen a year ago, owed in part to the slowdown in house price inflation.

 In total, there are now 5.5 million households in the PRS, but annual growth of 2.3% is now only a third of the level seen three years ago.

Tenant demand is still growing, albeit more slowly, with 27% of landlords seeing tenant demand increase in the last quarter, more than saw it decrease, but this was down from 39% a year ago, as first-time buyer numbers continue to recover.

On the supply side, there is a noticeable change too. In the first quarter of this year, the number of landlords expanding portfolios only slightly outnumbered those reducing them.

Some 19% of landlords now expect to reduce their portfolios, compared to 13% increasing, as amateur landlords leave the market in response to the new tax rules affecting higher rate taxpayers.

Additional pressure on supply has come from the Bank of England’s Prudential Regulation Authority’s new underwriting standards, introduced in January, with 24% of landlords who have sought mortgage finance this year have found doing so more difficult, with a further 6% seeing their application rejected altogether.

While there is likely to be consolidation in the market as tax costs rise, many landlords have  unsurprisingly reacted to tax changes and rising costs through not just rent rises, but also incorporation.

Running properties via limited companies means landlords are taxed as a company, rather than an individual, and can continue to offset all finance costs against rental profits.

Kent Reliance’s data shows six in ten applications for buy-to-let mortgages were via limited companies in 2016. Demand for limited company lending has not yet hit the heights seen last year, but limited company applications have still accounted for more than four in ten loans so far in 2017.  With 24% of landlords considering transferring their portfolio to a limited company or a partner or spouse, demand will strengthen in the long-term.

Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands in buy-to-let, said: “A perfect storm of weakening house prices, higher taxes and lending restrictions have knocked investors’ confidence. On top of this, investors are now being buffeted by the winds of political uncertainty following the election, and its impact on the economy.

“Uncertainty will pass, but the impact of changes to mortgage tax relief and underwriting standards will leave a more indelible mark on the sector. We believe these changes will alter the mix of landlords, creating a more professional and stable sector in the long-term. There are already some signs of consolidation, with highly geared amateur landlords most likely to leave, and we are also seeing investors take action to protect their margins.

“The fundamentals supporting the PRS have not drastically changed. Yes, first-time buyer numbers have been recovering, but there is still an underlying supply and demand gap across the country. Given the inability of any party to win a clear majority in the election, the implementation of a strategy to create a necessary housing boom seems unlikely. Affordability issues will therefore remain, and rental accommodation will retain its importance to those unable to take their first step onto the property ladder.” 


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One year on: Buyers and sellers undeterred by ‘Brexit scaremongering’

It has been exactly one year since Britain voted to leave the European Union by 52% to 48%, and while the government now gets on with negotiating Brexit, many purchasers and vendors are pressing ahead with buying and selling property, according to new research.

An independent survey of over 2,000 homeowners found that less than 4% are holding off moving because of fears around the impact of Brexit on the economy and property prices. A further 4% said the vote to leave the EU impacted their decision to buy or sell initially, but Brexit is no longer holding them back.

The findings from the research, which was undertaken by Atomik Research on behalf of haart estate agents, come just days after the latest ONS House Price Index revealed that the average price of a home in the UK has increased by around £12,000 on average since the vote to leave to 28-member state.

The study also revealed that of those who had been put off selling, 43% said they could not afford to move and 33% said the hassle of moving meant they were staying put. Just 7% said they were not selling because they were worried about future property prices. 

Paul Smith, CEO of haart estate agents, commented: “A year on from the UK’s vote to leave the EU, the UK property market remains sound. House prices are up 5.6% on the year, a world away from the 10-18% drop that the former chancellor was plugging to middle Britain, and clearly consumer sentiment is that the ongoing negotiations are not acting as a detriment to the market.
 
“Our findings underline the faith that the average British homeowner has in the UK property market to remain resilient, even amidst times of political uncertainty. On the ground we are seeing just as many people as ever looking to get onto the property ladder. Last month data collated from across our branches found that there are 11 buyers chasing every property on the market, and there are simply not enough homes to meet this strong demand.
 
“EU or no-EU the need for Brits to buy a sell a home is still there – and while the Government will be dedicated to securing a good Brexit deal, we must not lose sight of ongoing pressing challenges here at home. A severe lack of stock continues to hold back fluidity within the market, and saving up for both stamp duty and a deposit acts as too big a barrier for thousands of aspiring home owners. Instead of Brexit scaremongering, we need to look at deeper into creating housing solutions that will help buyers get the homes they desperately want.”

Has Brexit had any impact on your decision on whether to sell your home or buy a new one?

No, it makes absolutely no difference whatsoever: 75.2%

No, but I am concerned about the impact of Brexit: 16.1%

Yes, I was concerned about selling initially, but it is not an issue now: 3.2%

Yes, I was concerned about buying initially, but it is not an issue now: 1.2%

Yes, I'm holding off selling at the moment because of Brexit: 2.7%

Yes, I'm holding off buying at the moment because of Brexit: 1.7%

Percentage of people indicating the impact Brexit has had on their decision to buy or sell a home – source haart. 


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BTL lending forecast revised down

The Council of Mortgage Lender’s (CML) buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations at the end of last year, as ‘tax and prudential measures’ continue to ‘exert pressure’ on the market.

The CML now estimates buy-to-let lending of £35bn in 2017 and £33bn in 2018, a fall from £38bn in each year, forecast in December last year.

The revised forecast comes despite CML estimates that gross mortgage lending increased by 12% in May on both the previous month and on May last year to reach £20.1bn, as remortgage activity and first-time buyers continue to drive lending.

CML director general Paul Smee said: “Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.

“Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.

“While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market. Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.

“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.” 


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US home sales rebound as prices hit new high

Residential property sales in the US rebounded last month following a fall in April, helping to drive up prices in the process, the latest figures show.

High demand from buyers and a low supply of homes on the market helped to push prices higher across many parts of the country in May, according to the National Association of Realtors (NAR).

All major regions except for the Midwest saw an increase in sales last month and overall transactions rose 1.1% to a seasonally adjusted annual rate of 5.62 million, up 2.7% year-on-year and the third highest over the past year.

“The fact that sales of existing homes rose in May, despite incredibly limited selection, shrinking times on market and rapidly rising prices, is a testament to just how strong the draw to homeownership is right now for millions of Americans,” said Svenja Gudell, Zillow's chief economist.

The average sales price in May was $252,800 (£199,560), the highest nominal level on record and up 5.8% from a year earlier. There was a 4.2-month supply of homes on the market at the end of the month, based on the current sales pace. Inventory has declined on a year-over-year basis for 24 straight months.

Looking at the data, the average price of a home in the Northeast of the country has increased by 4.7% over the past year to hit $281,300 (£222,000), median price in the Midwest reached $203,900 (£161,000), up 7.3% from a year ago, the South saw growth of 5.3% to take the average price to $221,900 (£175,160), while the median price in the West is $368,800 (£291,130), up 6.9% from May 2016.

“Home prices keep chugging along at a pace that is not sustainable in the long run. Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions,” said Lawrence Yun, chief economist at NAR.


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London’s West End investment market dominated by £100m+ deals

Property deals worth £100m+ are dominating London’s West End investment market at the moment, with ten deals of this size totalling £2.175bn transacted this year, a record for both the number and volume of deals in this category, according to Savills.

The international property advisor reports that these ten £100m+ transactions have made up 69% of total turnover in the West End market in 2017, with Asian investors responsible for almost half - 49% - of deals of this size this year, compared to just 19% over the whole of 2016.

Domestic investors also appear to be pursuing larger lot sizes, says Savills, with three acquisitions of over £100m by UK investors recorded in the year to the end of May, the same number seen over the whole of 2016.

Savills says that the 11 transactions that took place in May totalled £583m, taking total investment in the year to date in the West End to around £3bn.

Paul Cockburn, head of the West End investment team at Savills, said: “A key characteristic of overseas demand is their willingness to target both scale and quality. With this comes the current high level of liquidity for large lots. Such is the demand of late there again seems renewed downward pressure on prime yields.”

Savills says prime yields in London’s West End market remain at 3.25% for the fifth successive month.


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Property auction calendar – 26th June – 2nd July

Property auctions are a good place for investors to pick up a bargain, and every week these events are taking place at venues across the UK, offering a wide range of properties for sale.

Here are details of the property auctions taking place next week.


27/06/2017         Cooper & Tanner Auctions           Wells     Somerset

27/06/2017         BRG Gibson        Belfast

27/06/2017         SDL Auctions Cheshire & North Wales    Cheshire


28/06/2017         Pattinson Property Auctions       Newcastle

28/06/2017         Luscombe Maye Totnes                                Kingsbridge

28/06/2017         Bliundells                             Sheffield             

28/06/2017         Luscombe Maye South Brent     Kingsbridge

28/06/2017         Romans                                Reading

28/06/2017         Auction House Scotland                                Aberdeen

28/06/2017         Bagshaws Uttoxeter                       Uttoxeter           

28/06/2017         Andres Kelly Auctions                    Rochdale

28/06/2017         Auction House Hull & East Yorkshire                        Beverley

28/06/2017         Agents Property Auction              Newcastle

28/06/2017         Stephen & Co                    West0n-Super-Mare


29/06/2017         Miller Metcalfe                 Bolton

29/06/2017         SDL Auctions North West             Bolton

29/06/2017         Athawes Son & Co                           London                

29/06/2017         Telsar Auctions                                 London

29/06/2017         Auction House Scotland                                Glasgow

29/06/2017         Auction House Sussex                   Hove

29/06/2017         Meller Braggins                                 Knutsford

29/06/2017         Southernhay Estate Agents – Torquay                   Torquay

29/06/2017         Wilsons (Northern Ireland)          Newtownabbey

29/06/2017         Town & Country Property Auctions         Ewloe


30/06/2017         Lambert Smith Hampton (Belfat)              Belfast

30/06/2017         Parsons Son & Basley                     Hove

30/06/2017         Boot & Son                         Cannock 


01/07/2017         Harry Ray & Company    Powys


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New online case tracking aims to speed up buy-to-let mortgage applications

A new online case tracking system that enables brokers to review the progress of mortgage applications on behalf of buy-to-let landlords has been launched by Keystone Property Finance.

The MyKeystone tracking facility for brokers, which features Keystone’s  classic range of buy-to-let mortgages, will aim to save brokers valuable time when checking on the progress of their cases, enabling them to keep landlords up-to-date with the status of their mortgage application without the need to call the lender’s administration team.

What’s more, it is hoped that the new platform’s ability to both allow brokers to add notes and upload requested documents will also help speed up the entire process.

Phil Riches, head of sales at Keystone, MyKeystone, said: “A handful of brokers have trialled the system, and like us, are pleased with its functionality.

“In addition to tracking Classic Range cases, brokers can see where they need to provide additional information and can upload documents directly onto the system. They can even add live case notes for Keystone administrators.

“We’ve had particularly positive feedback on the procuration fee monitor, which shows how much commission the broker has earned with us and what’s in the pipeline.”


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Rents continue to rise in Spain

Rental asking prices are increasing fast across many parts of Spain, particularly in hot markets like Barcelona and the Balearics; an attractive proposition for property investors.

Rental asking prices in Spain increased 8.8% on average over three months to the end of March, according to the latest figures from Idealista.com.

The Spanish property portal found that the average rental asking price was almost €9sqm (£7.90) per month at the end of March, based on more than 56,000 rental listings in the portal’s database.

Rents are highest in Barcelona, where landlords ask €18sqm (£15.90) a month, followed by Madrid €15sqm (£13.20) per month.

And according to another big portal, Fotocasa.es, rents rose 1.3% between April and May to €8sqm (£7.05), an annualised increase of 10.5% compared to May last year.

“So the rental asking price figures coming from the biggest portals appear to tell the same story – that rents are rising fast in Spain after almost a decade in the doldrums, with rising demand and limited supply feeding price pressures,” said Spanish property expert Mark Stucklin.

The founder and editor of Spanish Property Insight continued: “Spain still has some of the highest owner-occupier rates in Europe, partly because Spaniards have tended to see paying rent as throwing away money.

“But the property crash, and credit crunch that came with it, compounded by high and regressive transaction costs, have forced more Spaniards than ever into the rental market, especially the young.”

Stucklin believes that fast rising rents will attract the attention of local and international property investors

He added: “Though Spanish rental yields are not dazzling at around 3% to 4% gross in a city like Barcelona, they are significantly better than alternatives like government bonds, and look less risky.

“I expect small investors to continue opting for Spanish property for the foreseeable future.”


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UK home sales set to drop significantly amid political uncertainty

Residential property transactions in May dropped by 3.3% on the previous month, following two successive months of growth, in what could be a sign of things to come in the market, as many would-be buyers look set to hold off from buying property until there is greater economic and political certainly.

The UK housing market has slowed in recent months, with transactions dropping to 100,170 on a seasonally adjusted basis last month, as investors come to terms with higher stamp duty costs and the heightened economic instability caused by the general election and Brexit talks.

“Staying put is more attractive than ever for borrowers. In addition to the housing shortage, the latest fall in housing transactions is partly because most homeowners are taking advantage of the low interest rates by remortgaging rather than by moving,” said Rob McCoy, product manager of TMA Mortgage Club.

“The range of re-financing options currently available and rock bottom-rates, especially on five-year fixed terms, mean the remortgage market is booming,” he added.

Following a period of gradual decline, some housing commentators are optimistic that property transactions will pick up again in the coming months, while others, such as James Allen, head of Walker Crips Alternative Investments, expect to see a big fall in the next quarter.

“Property transactions show a slight fall this month, but expect to see around three times the deterioration in completed transactions for the next few months,” he said.

“The seasonally adjusted transactions for May are 3.3% lower than April, but the only thing remarkable about the latest data is that the seasonally adjusted transaction rate for the 2014, 2015 and 2016 calendar years are all within 0.5% of each other, according to Allen who insists that the transaction data “doesn’t reflect the bleak post-election UK outlook, and shows the danger of averages”.

He continued: “In May we had a huge lead for Theresa May in the opinion polls and we had a clear direction of travel on Brexit. Now we have a fatally weakened Prime Minister unable to pass the Queen’s Speech, and the prospect of a resurgence of UKIP in response to groundswell opposition to a perceived hard Brexit.

“Any market abhors uncertainty and the current political instability was unexpected, leaving the latest data short of time to reflect the new situation.

“I had expected to see property transactions fall in May, reflecting a slight softening of the UK property market. I now expect transactions to fall by 10% or more from the April figure as sellers will be slow to respond to the risk premium that buyers will now price in.”  


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Inclusion of letting agency fee ban in Queen’s Speech ‘reeks of desperation’

The Queen’s Speech was unsurprisingly dominated by Brexit, with a host of proposed new laws designed to prepare the UK for a smooth departure from the EU.

But there were a few main non-Brexit proposals in the Queen’s Speech outlining the government’s proposals for the next two years, including a Tenant’s Fees Bill, banning landlords and letting agents from charging letting fees.

The fees ban was initially announced last November during the chancellor’s Autumn Statement, and although the details are still very unclear, the move is clearly designed to shift the cost of all letting agent fees on to landlords.

Some experts now believe that this proposed change in the law will leave landlords with no choice but to further increase rents, as letting agents look to pass existing tenant fees onto landlords.

Danielle Cullen, managing director of StudentTenant.com, believes that the prime minister Theresa May is “clutching at straws” by including letting fee ban in Queen’s speech.

She said: “The inclusion of the letting agency fee ban in the Queen’s speech does nothing but reeks of desperation.

“Theresa May obviously failed to gain the public’s trust with her manifesto in the lead up to the election. Now she is desperately clutching at straws trying to please as many people as possible, on a matter very important to large numbers renting in the private-sector.

Cullen is annoyed that the consultation on the tenant fee ban was scrapped when the snap election was announced in April.

She added: “I would not be surprised if a bill is just pushed through without proper thought, in the hope of gaining more credibility for what currently seems to be a shambles of a government.

“This is deeply concerning for all of the small businesses who will not be able to maintain revenue without these fees, but also for tenants who will now have higher living costs as no rent cap has been mentioned as it was by Labour in their manifesto before the election.”

David Cox, chief executive at ARLA Propertymark, also expressed disappointment that the draft Tenants’ Fees Bill to ban charging tenants ‘lettings fees’ was announced in yesterday’s Queen’s Speech.

He commented: “It’s unlikely the Government had enough time to analyse all of the responses from the consultation, as it only closed 12 working days ago, on the 2nd June. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account.

“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants. 

“Research conducted by Capital Economics for ARLA Propertymark earlier this year shows that referencing checks undertaken by agents take, on average, eight hours to complete. It is therefore right and proportionate that the industry is recompensed for this work, which benefits tenants. The research also showed that letting agents stand to lose around £200m in turnover, costing the sector 4,000 jobs.

“Landlords themselves would lose £300m, meaning they may seek to cover their losses by increasing rents to tenants.”

However, James Davis, CEO and founder of online lettings agency, Upad.co.uk, was not surprised that proposals were brought forward to ban “unfair tenant fees” in the Queen’s Speech.

He commented: “Ultimately, market forces haven’t prevailed in all of this. Foxtons put their tenant’s fees up by £50 every couple of years and it is purely to increase their profits, whilst other high street lettings agents ludicrously charge over £300 simply to press print on an identical tenancy agreement to renew for the following year.

“Long suffering tenants have no choice but to pay it as renting is a necessity; it is not like if a shop put up its prices and the amount it sold would go down.”

 


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