News Headlines: Tuesday 4th February

Property

A new planning court will fast-track large scale developments under plans to beat costly legal challenges. Justice Secretary, Chris Grayling is to put forward the measures which include a stipulation that only groups with a financial interest can lodge a complaint. Judicial review applications more than doubled between 2000 and 2012, leading to concerns that major projects are being held up.

PF

The state pension is to rise by around £1,000 by the end of the decade as the Lib Dems agree to the triple lock pledge. They are the last of the three major parties to do so, guaranteeing a rise of around £20 per week. The National Pensioners’ Convention welcomed the news but expressed dismay that the consumer price index is used, rather than the retail price index which is higher.

Economics/Corporate

The public could be offered the chance to buy shares in Lloyd’s banking group as early as next month in a surprise announcement ahead of its results. Six per cent of the bank has already been sold to institutional investors but the chancellor is expected to authorise the sale of a larger part of the government’s 33% stake to both institutional investors and the public. Ian King in the Times comments that Ed Miliband’s recent promise to tackle a lack of competition in the banking market may affect the price, and should be given space in the retail prospectus.

Recruitment

The Association of Graduate Recruiters predicts a rise of 10.2% in vacancies for the coming recruitment round, following a rise of 4.3% last year. The biggest rises were in IT and Telecoms, the public sector, energy companies and banking and the financial sector.

 

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LSL PROPERTY SERVICES: SIX IN TEN LANDLORDS PREDICT GROWTH IN TENANT DEMAND NEXT YEAR

  •  58% of landlords predict tenant demand will grow in the next twelve months
  • Four in ten landlords reported growth in tenant demand in last six months
  • Nearly a fifth expect to expand their portfolios in 2014
  • Three quarters of landlords believe now is a good time to buy or sell rental properties

Prospects are bright for the rental sector in 2014, with growing tenant demand boosting confidence among landlords, and rising prices making properties attractive investment opportunities, according to a landlord sentiment survey conducted by LSL Property Services plc, which owns the UK’s largest lettings agent network, including national chains Your Move and Reeds Rains.

In the past six months, 41% of the 2,195 landlords polled reported a rise in tenant demand, with just one in sixteen seeing a fall.  Such growth in demand has been the driving force behind the series of rent rises seen during 2013. The majority of landlords (58%) predict demand will increase further in 2014, with just 10% expecting demand to shrink.

Nearly a fifth (18%) of landlords therefore anticipates growing their portfolio of properties over the coming twelve months, while 16% already expanded in 2013.

David Newnes, director of LSL Property Services, comments: “The rise in house prices is evidence of the underlying buoyancy in the property market and the stabilising of rent rises is an indication of the current healthy state of the rental sector. Landlords are therefore in a prime position to benefit from the strong yields on properties and aspiring buy-to-let investors can be encouraged by the climbing tenant demand, as not only does it signify the excellent long-term investment opportunity, but also demonstrates the continued appetite for rental homes.”

 

“Demand for rented accommodation is strong, exemplified by the fact that the number of lettings, new viewings and applicants are all rising. There are strong foundations for prosperity in the rental sector, fuelled by increased economic optimism and future job creation. Against the backdrop of growing economic stability, more confidence is driving people forward in search of the attractive deals on offer across the buy-to-let mortgage market, which will allow them to benefit from the attractive returns.”

 

Over three quarters of landlords (77%) believe now is a good time to buy or sell rental properties. Of those who think now is a good time to buy, 71% cited attractive property prices and half highlighted the better capital returns on offer compared to other forms of investment, while 47% pointed to strong tenant demand as a key investment driver.

 

MORTGAGE FINANCE REMAINS A STUMBLING BLOCK

Despite the stark improvements in the mortgage market recently, just one in six landlords believes the availability of cheap finance is a key reason for why now is a good time to invest – although this is up from one landlord in eleven in December 2012.  In fact 35% of landlords say that it is more difficult to raise mortgage finance compared to a year ago, highlighting that for some mortgage challenges remain a deeply embedded issue.

David Newnes concludes: “While the level of buy-to-let lending has been rejuvenated and is now climbing out of the doldrums, this is still short of historic levels. Securing mortgage finance is therefore not just a concern exclusive to first-time buyers, but remains a real and serious challenge for many landlords. Lending to first-time buyers and those without large deposits has itself seen a pick up but still has a long way to go, and the proportion of UK households is only increasing. It is the rental sector that will be continually needed to pick up the slack.

 

“Filling the chasm between supply and demand is also reliant on the rising number of buy-to-let investors accessing the affordable mortgages required, thus allowing them to further widen the pool of rental accommodation on offer.”

Paper Summary: 18th December 2013

Property
A new record 400,000 property owners are now property millionaires, that’s translates as twice as many as five years ago according to Zoopla. The number of homes worth £1 million or more has increased by a third over the past twelve months, thanks to soaring house prices in London and South East. The lack of supply of new homes in the capital was to a great extent responsible for driving forward a further 57,120 over the £1 million mark which equates to 156 new property millionaires a day in the capital throughout 2013, as shown by Zoopla. Prices are still rising according to the latest ONS figures, by 5.5% in the past 12 months, and the rise is even higher in London, jumping by 12%. Marsh & Parsons highlighted that prices are at more than double the rate of other areas , while Prime London continues to be a honeypot for UK and overseas buyers, as demand remains intense. As a result, LSL highlights that first time buyers are still having to leap higher than ever before to join the property ladder.

Personal Finance
Over half of UK shoppers are heading to discount shops, visiting an Aldi or Lidl figures revealed, for the first time ever. More than 13 million used the budget stores in the past three month, up from 46.1% a year ago. As a result all of the big four grocers have lost market share, as the so-called budget shops now make up a combined seven per cent of the total market. Credit crunch bargains are proving attractive across the country, as value continues to be a great incentive. Although Lidl and Aldi may not be as prevalent in London, more common in regions where shoppers can drive to do a food shop, this is likely to change, as more shops are expected to open next year. The type of customers are also said to be changing – those known as ABC1s (the traditional middle classes) make up just 25% of shoppers in 2011. Last year that rose to 41%, proving that Aldi is no longer the store of the cash strapped student.

Economy
Britons believe that securing growth as their top economic priority is more significant than higher wages according to a survey for the Independent. The ComRes survey findings suggest that the Conservatives message on the economy may resonate more than Labour’s campaign on reducing the cost of living. Their competing messages will lead to a fierce battle in the run up to the 2015 election. It’s interesting to note that in a list of important priorities over the next five years from a range of options, at the top was ensuring the economy continues to grow, followed by ensuring wages increase faster than prices, thirdly keeping inflation down and finally reducing the deficit. Now that the economy is growing the Tories will take comfort in the fact that that the findings show people view growth as the top factor.

Recruitment
More than half of the UK is said to be ripe for fracking according to a new Government report by engineering giant Amec, that shows a shale gas boom could create up to 32,000 new jobs. These plans have been met with mixed responses with some arguing it will cast a dark shadow over many communities in Britain who could now face the threat of fracking in their backyard. A new licensing round to enable firms to search for shale gas will begin in the summer. There could be between 14 and 51 vehicle movements to a fracking site each day over a 32 to 145-week period which could have a serious impact on traffic congestion, noise or air quality, depending on existing roads, traffic and air quality.

News Headlines – Thursday 12th December 2013

Business/Economic
Lloyds Banking Group and RBS have been fined a total of £90m –the former for serious failings in its sales practices, and the latter to settle accusations that it breached US sanctions. The FCA was particularly critical of the structure of targets and bonus arrangements that involved sales people being potentially demoted with a cut in salary of up to 50% if they failed to hit targets.

Property
The number of first time buyers has surged by three quarters over the past year as a surge of activity in the housing market pushes prices even higher. Haart revealed that the number of the first time buyer registrations had risen 78.4% in November 2013 compared to the same month last year. Both Haart and Zoopla say that average house prices in the UK have risen over £10,000 during the year, soaring way head of growth in typical wages.

The energy minister has indicated that the Government could defy an official recommendation that it must meet its green energy targets for the 2020s. Michael Fallon described the report as merely ‘advice.’

Personal Finance
Families are having to spend almost £500 more a year on housing and energy bills than a decade ago, forcing cutbacks in other areas to make ends meet. The ONS found that last year families spent an average £68 a week on rent, energy bills, and other housing costs such and maintenance and repairs, up from £59.20 in 2002.

Recruitment
The treasury has confirmed maternity pay will be protected after it was revealed by David Cameron that it would be lumped in with the welfare spending due to be capped in next Spring’s Budget. Francis Elliott, Times, p10; Shadow childcare minister Lucy Powell is expected to say that employers wrongly see mothers as ‘scatty and clock watching,’ as they fail to understand that they have already done a day’s work before they leave home. Powell is to call for a revolution to overcome prejudices faced by working parents.

News Headlines – 26th June 2013

Economics/Business

Sir Mervyn King lambasted top bankers and politicians yesterday for trying to interfere with efforts to make UK banks safer. The governor complained that bankers left meetings with the new Prudential Regulation Authority and out tremendous pressure on the politicians to water down the rules. FT, p2;  City AM, p1

Personal Finance

In his final public appearance as Bank of England governor Sir Mervyn King warned that many homeowners in their thirties and forties have unsustainably large mortgages and will struggle if interest rates return to 3 or 4%. He urged his successor not to raise rates until the issue is under greater control. The Times, p1; City AM, p4

Recruitment

The Chancellor is to announce the first steps towards performance related pay across the public sector as he scraps automatic salary rises, linked with time served. Setting out plans to cut public spending by £11.5bn, the Chancellor will impose further measures on wages of six million workers by abolishing incremental pay. Times, p4

Despite the coalition promising to promote female talent, the Chancellor has not appointed a single woman to a senior public sector post. Cabinet Office minister Francis Maude called for more women to be appointed as the business department, the Ministry of Defence and the treasury failed to meet its targets of 50% female appointments. Telegraph, p12

Property

Experian reports that there has been a 19.1% rise in £500,000 + properties in the first quarter of 2013 compared to the same period in 2012.

LSL/ACADAMETRICS ENGLAND & WALES HOUSE PRICE INDEX

Prices rise £6,726 over the past twelve months

  • Sales up 18% compared to last year
  • House prices up £707 in April and have only fallen once in the past 17 months
  • Of the 10 regions in England & Wales only two regions have negative house price growth

House Price

Index

Monthly Change %

Annual Change %

£231,170

235.4

0.3

3.0

David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments: “House prices in England and Wales climbed £707 in April, have risen £6,726 in the past 12 months and have dropped only once in the past seventeen months. The catalyst has been a significantly improved mortgage market.

“Sales are 18% higher than they were last year, reflecting the improved conditions for buyers. A plethora of excellent mortgage deals are surfacing, cheaper mortgages have trickled into the market and low interest rates too have led to a boost in buyer activity. The impact of the Funding for Lending Scheme (FLS) has been significant, allowing banks and building societies to accelerate lending levels to a wider pool of borrowers. Gradually, competitive rates have emerged which should mean we will see a solid improvement to lending levels in 2013.

“A word of warning though: the strong performance of the London market is dragging up the average UK house price and glossing over weaknesses elsewhere in the country, particularly the north of England and most of Wales. This is due to the lightning fast speed of growth in the capital. Take London out of the picture and the national rise in prices falls to 1.1%. Here the widening gap is also conspicuous between housing types and income groups. London is seeing a rise of 5% (2010-11) and 5.7% (2011-12) in properties sold for £1 million plus, while the rest of the country sees a drop of -5.3% and -8.5%. London’s share of the whole £1m market and £2m property market has grown rapidly, outdoing its counterparts, suggesting wealthy buyers still form a disproportionately large share of the market.

“Despite difficult funding challenges, the Government’s attempts to steer the housing market have been vital to the progress it has made so far. The property market has been recognised as key to a healthy economy. Numerous measures, such as the FLS, the Help to Buy, New Buy and First Buy, designed to stimulate lending for development and mortgages, are being taken to stimulate the market against strong economic headwinds. At the moment, the FLS needs to be improved in scale before we are to see a more substantial effect. In order to unlock increased LTV lending in a controlled way, lenders need the constraints that require them to hold 8 times more capital in reserve for advances over 60% LTV to be loosened. Unless these constraints change, alongside the increased cheaper funding availability, lenders will find it hard to extend lending to many hard pressed first time buyers.”

New 5 year fixed rates from 4.88pc at Keystone Buy to Let Mortgages

 

ImageKeystone Buy to Let Mortgages has comprehensively improved its offering with new products, rate and fee reductions, and criteria and service enhancements.

 

Responding to a call from investors with larger deposits, Keystone has introduced a series of five year fixed rate mortgages at 70% loan to value starting at a competitive 4.88%.

 

Existing five year fixed rates at 75% LTV have been reduced by 0.40%. Similarly, three year fixed rates at 75% LTV have been reduced by 0.15%.

 

Commenting on the new products and rate reductions, managing director, David Whittaker said:

 

“We’ve worked hard with Aldermore Bank (which provides the funding line) to come up with a stand-out series of five year fixed rate products priced below 5%. It makes them really competitive particularly for landlords that sit outside mainstream buy to let lending criteria.

 

“The price reductions on the existing fixed rate products demonstrate how the gap between three and five year cost of funds has narrowed. The new five year rate is particularly good for investors who like the security of locking in for a longer period of time.”

 

Keystone has also reduced its lender fee by up to 0.50% on the products designed for multi-unit and HMO properties, and applications by limited companies. All fees in the Keystone range can be added to the loan amount on top of the LTV allowing investors to maximise borrowing.

 

From a service perspective, Keystone has increased the number of solicitors on its panel with the appointment of Russell & Russell and changed its title indemnity insurance to speed up the completion time for remortgages.

 

Rob Lankey, managing director of Commercial Mortgages at Aldermore said:

 

“We are delighted to welcome Russell & Russell to the solicitor’s panel; it will certainly help with the rise in applications. Similarly the new title indemnity insurance will help Keystone provide a quicker, more efficient service to brokers by reducing the time required for searches and paperwork on remortgages.”