Richard Carr talks about 3 things you need to know about the UK housing market in 2018

Since the Brexit referendum has happened, the UK housing market has been experiencing some instability in certain areas. It has been facing major difficulties in the recent months in properties at the higher end of the spectrum and in certain geological areas. This, in turn, has resulted in uncertainty from buyers. Since 2016 the average price in the UK has gone up to over £220,000 per dwelling. Although this pricing has gone up between 2012 and 2017, the earnings growth hasn’t corresponded to this, making it extremely difficult for people to buy houses. Richard talks to us about 3 important aspects of the housing market that you could take advantage off.

A fixed rate mortgage might be the best option for you

• You remain stable for consecutive years.
• Can be used with buy-to-let properties too.
• More properties are being built and are expected to come to the market this year.
• First-time buyers can take advantage of schemes like Help to Buy to further augment choices.

Buy-to-let is still a viable option for investors

• Tax reforms left uncertainty for buy-to-let investors.
• Liverpool has increased in rents at 6.2% PA.
• Nottingham increased in rents at 6.2% PA.
• Cardiff increased in rents at 6% PA.
• Southampton increased in rents at 5.9% PA.
• Greater Manchester increased in rents at 5.9% PA.
• University towns remain a good place to invest in buy-to-let.

Affordable homes are available
• Local councils are working with private developers to make housing assessible for all.
• Shared ownership allows you to part-own or rent part of a home.
• Government schemes including Help to Buy.
• Areas such as the west of the UK are cheaper to live.
• Stamp duty has been abolished for first-time buyers if the property they are buying is less than £300,00.

 

 

 

Richard Carr looks at recent construction growth in build-to-rent sector

While there is plenty of negative or ambivalent media attention surrounding the UK property market at the moment, official figures show that there is much to be positive about.

The British Property Federation, which represents developers like Fortitudo Property, as well as property owners and agents has just released the first set of annual figures specifically for the ‘build-to rent’ sector. The figures represent the number of homes in the UK that have been built specifically to be rented out and professionally managed.

Growth in sector

Figures from the report show that the number of build-to-rent homes that have either been completed, are under construction or in the planning pipeline across the UK has gone up by 30% to 117,893 during the 12 months up to the end of March 2018.

Image Richard Carr construction growth in build to rent sector

This sector has been boosted after the government specifically gave it a more prominent role in the national planning policy. With a strong development pipeline, it’s likely that the build-to-rent sector could double to about 200,000 by 2020.

Completions also grow

The number of houses completed in this sector was 20,863, which is a 45% increase on 2017. The number under construction has increased even more by 47%. But why is this growth happening?

As well as the government’s support for the sector, build-to-rent generally attracts long-term institutional investors as it offers a rental income stream that can pay for things like pension liabilities. And, following the government’s lead, lots of local authorities have also put their weight behind this sector, as the realisation dawns that it offers a realistic way to generate long-term, useful income and will help to meet those all-important housing targets.

Regional variances

Housing associations and councils are collaborating with developers more and more on build-to-rent schemes. At the moment, London has more build-to-rent developments than other regions, but these figures show that everywhere else is catching up.

Regions outside of London account for 62% of the total of build to rent houses under construction. Again, this is partly thanks to more positive and supportive attitudes from local authorities, which are welcoming more rental-focused developments.

Areas outside of the capital that are becoming hotspots for the build-to-rent sector include Liverpool, Manchester and Bristol. London is increasingly being seen as more of a challenge by developers in this sector. This is even though many mortgage owners in London face difficulties due to the lack of affordability and high house prices.

This is because developers of homes they intend to sell can construct and sell in different phases, while a build-to-rent developer must finish the whole site before renting out and seeing returns.

Fast-tracking affordable housing

London’s mayor has backed the policy changes and said that developments that come with a minimum of 35% affordable housing will be fast tracked through the planning process. However, the build-to-rent industry argues that implementing a 35% threshold for developers who are building to sell, and those building to rent, is unfair as it “cannot compete with build-for-sale on land acquisition and pricing”. But, the affordable housing targets in London will stay.

One of the major criticisms often thrown at the build-to-rent sector is that it doesn’t properly address the urgent need for family-sized accommodation, as it concentrates on smaller homes for professionals. However, the research shows that this is starting to change, with 17% of the build-to-rent schemes currently under construction or being planned include decent-sized houses, as well as apartments.

Richard Carr

Richard Carr discusses unspent housing budget

It’s recently come to light that MPs are demanding an explanation from government ministers about a huge amount of money from the housing budget that hasn’t been spent.

They were informed that £817 million that was allocated for the UK’s desperately needed affordable housing schemes and other projects has ended up back at the Treasury.

Cross-party committee

News of this unspent cash has apparently astonished members of the cross-party housing, communities and local committee. It certainly seems to directly contradict the prime minister’s recent assertion that housebuilding is at the top of the Conservative’s priority list. In addition, it must have been shocking to hear for local authorities, many of which are becoming desperately mired in financial problems due to constant cost cutting measures from central government.

The committee discovered the colossal underspend for the financial year 2017-2018 and confronted both the homelessness minister (Heather Wheeler) and housing minister Dominic Raab. The government is under massive pressure from MPs and the Local Government Association (which is also controlled by conservatives) to implement some helpful measures for the local authority sector, which has endured budget cuts of 50% since 2010.

Strain on local authority budgets

Bob Blackman, Tory MP and acting chair of the committee, said: “We will be wanting to know why this very large sum has not been spent at a time of great strain on local authority budgets, and why it was not channelled to other spending projects.

“It does not help those of us who argue that more should be given to local authorities if the chancellor knows money he gave last time has not even been spent.”

MPs want to argue for more money for local authorities, given that unexpectedly high tax receipts have left the Treasury with between £7bn and £10bn extra.

Public finances

On the government’s side, the Chancellor explained that much work had gone into putting public finances back in order, and they’re now ready to pump money into services, which includes housing.

He said: “We’re making good progress on building the homes this country needs with, last year, a 20-year record high for housebuilding. This is how we build an economy that works for everyone.”

Affordable housing

However, this doesn’t fit with evidence regarding the number of affordable properties that have been built. Helen Hayes, MP for Labour said she thought it was astonishing that this amount of money is unspent when the number of affordable homes built by local authorities has plunged since 2010.

She said: “This is the biggest issue for families up and down the country. It is simply astonishing and unacceptable that there is so little urgency being shown.”

Since around 1988, local authorities have consistently cut back on social housebuilding due to the impact of increasing budget cuts. Councils have also been discouraged from building new houses by the government’s ‘right to buy’ scheme, which lets tenants buy council properties at a discount of 40%.

Council development companies

richard carr houseMany councils have implemented their own property development companies to get around the rules set by government, so that they can get on and build homes. However, progress has been limited, partly die to the threat from the government that they might extend ‘right to buy’ to the new development companies owned by the council.

While shadow housing minister John Healey said that housing and local government secretary Sajid Javid’s department is ‘selling families short by surrendering much-needed cash for new homes’, a housing ministry spokesman said:  “We are investing £9bn in affordable homes, including £2bn to help councils and housing associations build social rent homes where they are most needed.

“All of the affordable housing underspend from 2016-17, including £65m returned by the Greater London Authority, has been made available to spend on similar schemes.”

Potential council insolvency

The National Audit Office estimates that 10% of local authorities and county councils have less than three years left before they are vulnerable to insolvency. It seems many people agree that urgent action is now needed.

Some developers have always been positive about affordable housing, yet have had their hands tied. At Fortitudo, we always strive to be part of the solution for people who need affordable homes, and hope that the government will act to make it easier for their own housing goals to be met.

– Richard Carr

Richard Carr on how the ‘Brexit effect’ could be evening out house prices

There’s no denying that Brexit has been a divisive issue since the referendum vote of June 2016. And while we don’t formally leave the EU until March 2019, there have been various effects on the economy and, of course, property.

While the initial burst of doom and gloom predictions surrounding the economy didn’t come to fruition, there has been a surge of interest in property around the UK which has boosted regional areas. Continue reading

Optimistic start to 2018 for the UK’s property market

Most regions of the UK have seen a rise in asking prices since the beginning of 2018, leading to a justifiably optimistic feel for the sector.

The latest property pricing index from Rightmove shows that the Midlands is leading the way with prices rising more than three times faster than the national average. This rise in asking prices is fuelled by record home hunting activity in the country. Continue reading

How developers are funding local infrastructure projects

Fortitudo Property has generated in excess of £5 MIllion as part of the Community Infrastructure Levy in Poole (CIL). And part of this goes towards the CIL Neighbourhood Portion fund that is earmarked specifically for local infrastructure projects to improve facilities including local open spaces and plan, transport, health, education and more. Continue reading