Industry change news
William Naylor of Naylors talks about the Government’s recent energy efficiency regulations and the effect it has on the rental sector in the latest Harborough Mail.
Read the full article below
Britain finally has an improving economy, one that is set to remain in this trend for the foreseeable future. The housing sector, however, will need more houses built to remain financially secure.
Although the government has pledged another 200,000 homes a year, Britain hasn’t had growth like that since 2007, with the sector slowing over the financial crisis that followed. In addition, some fear the figure is still not enough; housing charity Shelter estimates that 250,000 more homes per year are needed.
The private sector is hampered by red tape when it comes to construction that to date have prevented optimum new properties being built. Many in the industry believe that the construction of 200,000 new homes is unlikely without change, with the planning system and opposition to building cited as common obstacles.
However, the government say the simpler National Planning Policy Framework introduced in 2010 is effective, the amount of granted planning permissions growing year on year: 158,000 in 2011 to 240,000 in 2014.
Another factor is lack of land. Although this slows building, greater demand causes property prices to hike. One potential solution would be to make greenbelt land available for construction, but this could prove unpopular in some regions.
Among the ideas to encourage construction are radical options, such as taxing land banks, though this has been widely condemned.
Significant policy changes are needed to reach the 200,000 new home target. Whilst first-time buyers may be caught in the surge of demand for affordable housing, this is better news for landlords and those buying to let, with property set to maintain or increase in value.
A new study by the London School of Economics has revealed that constructing new properties does not force house prices down.
The research, which examined the price impacts of a range of Barratt Homes projects in suburbs and villages throughout the last five years, found no evidence of price deprecation for the properties considered.
Instead, the opposite was true in several cases. The report states: “Developments of the size and scale studied, even in areas where originally objections were significant, can lead to more rapid rises in local house prices.”
In total, eight developments comprised of 300 new homes were looked at, all based in the Midlands and South England.
Good news for construction and property markets
These results are in stark contrast to the prevailing view of many economists – that more houses are required in order to limit the prices of future properties. This is excellent news for the both the construction industry and the property market alike, and should invigorate further building developments. Although construction fell short of targets in 2013, with just 141,000 new homes being built, the consensus holds that between 200,000 and 300,000 new properties are required each year. This latest research will give interested parties the confidence to reach the larger target.
Whatever your view of the 2015 UK General Election, the result has sparked renewed activity in the London property market that is expected to echo throughout markets nationwide. It will have an effect on ‘commuter towns’ in particular. With both the dissolution of the Mansion Tax for luxury properties, and uncertainty over tax benefits for homebuyers allayed, international buyers have rushed to purchase top-end properties since the Election results were announced, and this heightened activity is set to form a pattern as ‘bottlenecked’ decisions from the start of the year gain traction.
The Conservative win provides a greater stability regarding economic policy, and with planning policies established prior to the election now free to gather momentum, overseas interest in UK and in London real estate in particular has been newly invigorated as both buyer and seller confidence is reinstated. The message sent out by current policies is that Britain is once more a safe investment option. Residential assets above £2m are expected to rise by up to a fifth, while properties in London are likely to double over the next 12 months, and it is locations within commuting distance from the capital that are set to benefit most from reinvigoration of the London property market. With the Stamp Duty increases of December 2014, this remains a concern at the top end of the market and contributes to a higher tax environment than the rest of the country. Those looking to relocate from London will be able both to sell existing properties with unprecedented ease, and to capitalize on the favourable prices elsewhere in the country.
As buyers and sellers take action in the luxury property market, property markets further afield will respond accordingly as the economy is bolstered. The advantageous price differences outside of the capital will mean that it is markets outside of London where the greatest property value increases are expected, with the biggest growth also predicted in markets outside of the capital.
Moving from London to Market Harborough
Those hoping to relocate will find the transition from London to Market Harborough smooth. As well as an excellent rail link to the capital and many local farms, parks, shops such as Jacks luxury wear, Bates the Butchers and home-grown style bastion, Joules, make Market Harborough reminiscent of London’s upmarket Hampstead or Richmond, and Harborough is better-placed than ever to benefit from latest political and market developments and exciting projection of economic growth.
We’d love to make you a part of our success, for commercial property in Market Harborough, houses or flats in Market Harborough– visit Naylors on The Square, Market Harborough or talk to us today 01858 450020.
Up until September of 2014 it was generally accepted that the Bank of England’s first interest rate rise would occur in the first quarter of 2015. However, in the past weeks there has been a significant shift in popular opinion regarding the rise, in part due to recent economic data, falling inflation and oil prices.
So when are interest & mortgage rates going to rise?
Mark Carney, Governor of the Bank of England, has issued new ‘forward guidance’ on when the Bank of England will raise interest rates. He has noted that interest rate rises will no longer be linked only with a dip in unemployment rates, but with 18 separate economic indicators.
Due to the latest inflation data, Mr Carney has admitted that the pace and degree of any rate rise has changed from his estimations a year ago. The market has decided that this means that interest rates won’t go up until the latter half of 2015, and perhaps even as late as 2016. Mr Carney has also been careful to note that when rates do rise, it will be a gradual process.
But could other factors influence a rise?
Despite the Bank of England’s change in forward guidance, there are a number of factors which could influence when interest and mortgage rates increase.
These include increasing official support for a rate rise, a growth in the UK economy, optimism over future economic growth, a fall in unemployment, and upgraded UK economic forecasts.
For house buyers, the low inflation a low interest rates could be the best opportunity to secure a low interest mortgage for some time. So if you are considering moving home or buying for the first time contact Naylors Estate Agents for a full selection of properties in the Market Harborough area.
So, it’s happened at last. The demise of the home information pack (hip) and the return to agents being able to list properties as soon as they are instructed, subject to a few small and non time delaying administration points.
As announced last week the new coalition government has implemented one of their mutual policy objectives and have announced the suspension of the hip with the intentions of scrapping them completely in due course. All that remains necessary for estate agents to act is to confirm their instructions in writing, complete anti money laundering identity checks and order an energy performance certificate.
There will be some delight in the estate agents office throughout the country at the removal of the regulation and of course pleasure with all sellers that have now saved themselves the £200 to £300 hip cost. However buyers might be a little less pleased as many of the costs associated with a conveyance will now revert back to them. These include local authority, water and sewage searches. What is gained on one hand is lost on the other! Particularly I think of first time buyers.
As an estate agent I am saddened at the demise of the hip for a number of reasons. Most importantly I believe hips have speeded up the transaction between ‘under offer’ and ‘exchange’ and further more have reduced the ‘fall through’ rate of properties in the lead up to exchange of contract. Delay and disappointment is stressful to our clients and of course bad for us.
I’m also sad to see the link between conveyancers and estate agents drift apart. Hips required us to start the team work on instruction. It cannot be helpful to revert to the old system of conveyancers learning of their client’s sale plans the morning the notification of sale arrives from the estate agents.
What will the removal of HIPS mean?
The most interesting observation going forward will be whether the removal of the hip will bring more property on to the market. As has been stated in this column over the last few years the market is desperately short of listings, resulting in inactivity as sellers have not put their properties on the market for fear of not finding a new home go to. Will the new political stability, summer weather, removal of hips mean a flood of properties coming to the market? Would such a flood of properties be good for the market and prices anyway? Time will tell but I think the loss of hips will not alleviate the economic concerns, lack of mortgages or issues of affordability which have frustrated the market for the last few years.
Finally I would suggest that if the new government is keen to remove bad laws then they would do well to address the issue of VAT on listed building repairs or the unworkable Hunting Act.
Any reader of the newspapers will have come across a range of property statistics and surveys which indicate a wide range of different trends. We are faced on a monthly basis with surveys and analysis from the Land Registry, RICS, Rightmove, Halifax and the Nationwide. Often these surveys tell differing stories and indicate different trends. The simple reason is that the all measure different aspects of the housing make. But who do we believe in trying to establish what is happening in the market.
The report that is perceived to be the most actuate is the Land Registry as this looks at all transactions that actually take place. The disadvantage is that it is historic and more likely to be at least 3 months out of date. In contrasting the house price in the Spring with the Autumn we are going to see differences in the yearly trends.
In many ways the opposite is true and the most up to date is that of the Rightmove survey. This looks at guide prices of properties on the market at that very moment. Very helpful but a sale cannot be considered a fact until a buyer and sell have agreement and completion has taken place. This survey looks at expectation in many respects.
The middle ground is filled with the likes of the RICS which looks at Surveyors expectations and confidence in the housing market. This is a large survey of 250 estate agents and surveyors but is of course subjective in its outlook. The better know are that of the Halifax and the Nationwide. These look at their sales and mortgage advances and the expectations but only though their own businesses.
The reality is that the surveys all fill their own specific role and to comment fully the estate agent has to consider the surveys all together.
The use of national and regional statistic does not hide though the need for good local knowledge. As estate agents at the coal face we can comment on what has been selling well, where there is the exclusivity and which types of properties have struggle. There is no better comparable than having your feet on the ground.
House price variance
We also know that there can be considerable variance in street or village. The best houses can be double that of the worst house in certain areas. Once again it is the skill of the estate agent to know first hand of comparable sales in order to provide an acuate valuation.
We are often asked to comment on the latest house price survey by buyers or seller and so when we say it all depends we is more that just hedging our bets. The values of individual houses are more that just trends.