Victor Michael

Levels of investment into the British commercial real estate sector are set to cool in 2022, having enjoyed a 40% year on year increase between 2020 and 2021, according to the latest market analysis by Revolution Brokers.

Last year, just shy of £50bn was invested into the commercial sector, with the revival of a pandemic-stricken London market driving this activity with £21.2bn worth of investment alone. This equated to a 40% increase in commercial real estate investment when compared to 2020, with an average of £4.162bn invested every month.

As of July this year, £22.2bn has already been invested into the British commercial property sector, an average monthly total of £3.172bn. Based on this rate of investment, Revolution Brokers estimates that total commercial real estate investment should stand at almost £38.1bn by the end of the year.

While this is higher than the £35.7bn invested in 2020, it would mark a year-on-year decline of -24% versus the £50bn invested in 2021.

But what’s behind this annual decline in investor appetite for commercial property? It would seem an oversaturation of stock available on the market may be to blame.

Between 2019 and 2020, the level of commercial real estate listed for sale across Britain fell by -26%, with this heightened demand also pushing up the average asking price of commercial plots by 6%.

This trend continued between 2020 and 2021, with the available stock falling by a further 14% year on year, with the average asking price this time climbing by a notable 34%.

However, the level of stock available on the market in 2022 has actually climbed by 7% versus last year, with this additional supply also causing the average asking price to drop by -17% year on year.

 

Source: www.propertyreporter.co.uk

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National Trading Standards has this week announced that by the end of May 2022 all property listings will need to contain the property’s council tax band or rate and the property price and tenure information (for sales), in a new effort to improve the availability of upfront information in the conveyancing process.

In a move generally welcomed by the industry, the announcement is in line with the government’s Levelling Up White Paper which spoke of “ensuring the critical material information buyers need to know…is available digitally wherever possible from trusted and authenticated sources, and provided only once”.

The changes represent the first phase of a three-phase project by the National Trading Standards Estate and Letting Agency Team (NTSELAT), in partnership with industry leaders and the UK’s major property portal- and define what constitutes material information for property listings.

Two further phases are being developed, which will incorporate further material information such as restrictive covenants, flood risk and other specific factors that may impact certain properties.

As the new data fields for tenure, price and council tax are added to portals, those left empty by an agent will be flagged on the listing so that consumers can see what is missing. This will link to advice on why that information is important and how it may be obtained.

National Trading Standards wants all material information to be mandatory on property listings once all three phases of the project are complete. At that stage, agents will need to include all the required information before it is listed on a property portal.

In addition to the announcement by the NTS, The Competition and Markets Authority (CMA) has also been working to improve how the leasehold market works for consumers. It is investigating and has acted against potential breaches of consumer protection law in the leasehold housing market, including unfair contract terms in leases as well as broader allegations of mis-selling of leasehold property. The CMA has also stressed the importance of people being fully aware of the annual costs of owning a home before they buy, and that clearer upfront information is needed when properties are sold.

Source: www.propertyreporter.co.uk

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Despite rising inflation and the end of both the furlough scheme and stamp duty holiday, UK house price growth continues to deny economic gravity as we head into the festive period. However, what goes up must surely come down – eventually.

The latest market analysis from Estate Agents show that a combination of rising interest rates and a much-needed increase in housing supply are the likely culprits to end the seemingly never-ending streak of stronger than usual house price growth.

 

Nationwide reported that the average UK price exceeded £250,000 in October for the first time. Indeed, new analysis shows the total value of the housing stock in England and Wales was £7.68 trillion in July 2021, which was an uplift of £720 billion from March 2020, when the total value was £6.96 trillion. The study, which puts a number on the total value of all private housing, factors in exchange prices as well as changes to house prices. A higher overall figure can reflect a larger number of households in a given local authority as well as higher-value properties.

 

The combined housing stock in the top ten local authorities by value also broke through the trillion-pound barrier over the course of the pandemic, rising to £1.007 trillion from £978 billion. However, there were not increases everywhere.

 

The highest total in July this year was £157.8 billion in the central London borough of Westminster, which was down by 10.1% from March 2020. The decline was the highest in England and Wales but is understandable given the area’s high proportion of flats and the fact fewer international buyers were able to travel to the UK.

 

However, it was one of only three local authorities in England and Wales that saw the value of its housing stock fall over the period, together with Lambeth (-2.2%) and Wandsworth (-1.1%).

There were other interesting changes in the top ten most valuable areas over the course of the pandemic. Cornwall leapfrogged Richmond-Upon-Thames into eighth place while Leeds replaced Ealing at number ten. Both changes can be explained by the growing demand for space and we have previously explored how Yorkshire, in particular, has benefitted from this trend.

 

The top three largest increases over the period were all in northwest England: Rossendale (24.2%), Wirral (21.6%) and Liverpool (21.6%).

 

Two things will curtail this strong level of growth. The first is rising interest rates. Last week, the Bank of England held the base rate at 0.1% but a rise is clearly coming.

 

However, it would be wrong to overstate the short-term impact on the UK housing market. Rates were 0.75% before Covid struck and any effect is likely to be limited while rates remain below this level. What’s different between now and early 2020 is the presence of inflationary pressures, which may cause demand to start fraying around the edges depending on how elastic the definition of “transitory” becomes. Longer-term, there will need to be a readjustment as rates normalise, a process that has been delayed by the pandemic.

 

Over 3.5 million first-time buyer mortgages have been issued since the base rate dropped to 0.5% in March 2009. That is a large group of homeowners who don’t know what it’s like when interest payments rise meaningfully.

The other thing to watch closely is supply, which will put downwards pressure on prices as it increases. The housing market is famously seasonal, so can we tell yet what is likely to happen next spring?

 

Source: www.propertyreporter.co.uk

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Houses in Multiple Occupation* are facing new rules starting 1st of October. Landlords have just a couple of days more to apply for the licence.

Landlords urged to apply for new mandatory HMO licence as deadline approaches

*HMO criteria:

• is occupied by five or more persons
• is occupied by persons living in two or more separate households
• and meets:
o the standard test under section 254(2) of the Act
o the self-contained flat test under section 254(3) of the Act but is not a purpose-built flat situated in a block comprising three or more self-contained flats, or
o the converted building test under section 254(4) of the Act.

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1. Did you know that trespass is not just confined to people? If climbing plants such as ivy or wisteria extend into a neighbouring garden it is considered trespass and if damage is reported the home owner could be liable.

Photo source: https://bit.ly/2MObtzi

2. Movement due to the proximity of trees to a building is a common problem. A mature poplar can take up to 50,000 litres of water from the sub soil each year.  The root radius of a tree is often equal to or greater than its height above ground level. In some cases, e.g. willow, poplar, elm the radius can be up to twice the height.

3. Did you know that it’s possible to remove a chimney breast from a bedroom to make way for a fitted wardrobe, for example, and leave the chimney stack above?  But you can’t just leave it hanging there – it will need to be properly supported, usually with a substantial concrete or steel lintel.

4. Efflorescence is a common sight in new brickwork. It’s caused by soluble salts in solution being brought to the surface as waste in the wall dries out. It is usually a harmless, temporary problem often occurring in spring following a wet winter. The main concern is the unsightly appearance caused by the white staining that it produces.  Persistent efflorescence may indicate a design or construction fault.

 

5. The problem with wood worm is that it can fly! Woodworm isn’t a worm at all, rather it is the larva stage of the common furniture beetle. The female beetle starts the life cycle process by laying eggs directly into the timber through cracks, crevices and existing flight holes. The larval stage can last up to 5 years. The holes associated with woodworm are the flight holes of the emerging adult beetles.

Photo source: https://bit.ly/2D5ZqO0

6. If a chimney was built before 1965 the construction would have been controlled by local bye-laws. It was only with the 1965 Building Regulations that there was a requirement for all chimney flues to be built with liners. That is not to say older chimneys would have been unlined – often the flues were rendered with a lime render – but the approach was not consistent.

7. Radon gas is a radioactive gas, but you can’t see, smell or taste it!  Because it is radioactive, it has considerable implications for people’s health.  It originates from the rocks and soil found everywhere in the UK. The radon level in the air we breathe outside is very low but can be higher inside buildings because it can accumulate in confined spaces. Public Health England has produced a map showing the areas where there is a greater risk of radon gas.

Source: 7 facts about property that you (probably) didn’t know….

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Photo source: Pixabay http://bit.ly/2pcBFtF

The inflation for house prices reached a 5 years low: 4.9% this April compared to the average of 6.9% in the last 5 years.

Considering the fall from the last quarter of 2017, what the housing market is feeling now is actually a rise of 2.9% for prices. But this is mainly because the last quarter of 2017 consisted of a fall of 0.5%, instead of a growth.

Large regional cities are the strongest perfomers with signs of slower growth across the south coast. The pace of overall city level growth is losing momentum, partly due to static prices in London.

One of the cities with the fastest growth rate is Manchester, but the situation is unique in each UK large city.

London is actually the most particular: most of the authorities signalized a growth, but there is still a consistant number (16 out of 46) that are registering a negative growth and prices falling.

Details and an overlook in this very good analysis on Hometrack:

UK Cities House Price Index – April 2018

 

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Photo source: https://bit.ly/2HBT7iT

The market always anticipated the trends for anyone willing to ‘listen’ carefully to it. The build-to-rent trend is one of the many activities that appeared when (and where) a gap appeared between demand and supply.

Now someone has to address Generation Rent:

” those under 35 years old in full employment stuck in overpriced housing and earning too much to qualify for social housing”

But what do they need? More affordable private rental properties. And here’s where build-to-rent comes to meet the demand!

In recent years, smart investors speculated upon these trends and needs and have created new homes. Usually we are talking about flats that are designed to be rented on the long term, instead of actually bought fast by first time buyers.

Now, the figures are saying there is a 30% of the population renting in London.

Recent forecasts by PwC property consultants expect to see 60% of Londoners living in rented accommodation by 2025.

The growth in renters can only be supported by private investors. More helpful information and forecasts for investors in this article on Property Reporter:

Build to rent investments to become the mainstream by 2025

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Photo source: EUGDPR https://bit.ly/2GZg6TZ

GDPR is an acronym for General Data Protection Regulation and it is one of EU’s measures to ensure that an individual data is well protected by companies. The GDPR takes action starting these days and it might affect you more than you think.

First of all, if you are a real estate operator, you should be implementing GDPR concerning your customers. Private data are no longer at anybody’s disposal and security measures are a must. Otherwise, you – as a company, or as an individual, are facing high penalties.

Secondly, if you’re a buyer/ a landlord/ a tenant or any individual interested in a property, most probably your data is already at multiple real estate operators. You have to make sure your data protection rights are respected. But first you have to know them…

GDPR – How will it affect the property sector?

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Photo source: ARLA https://bit.ly/2HOCYH5

The Tenant Fees Bill can soon be a reality for tenants in England. The Government also answered upon the HCLG Select Committee report on the draft Tenant Fees Bill.

The main changes the Tenant Fees Bill can be read here. The most important provisions in the document that are to affect tenants (and landlords) are:

  • Maximum security deposits: six weeks’ rent.
  • The upper limit for holding deposits can be of no more than one week’s rent.
  • The landlords can charge more than £50 for sharer charges only after they prove that the costs were greater than the amount mentioned.
  • Landlords will not be able to issue a Section 21 notice until they have repaid any unlawfully charged fees.
  • Letting agent transparency requirements will be included in The Consumer Rights Act 2015. This will also be applied to websites and portals that do lettings.

Moreover, the Trading Standards should help tenants to recover unlawfully charged fees via the First-tier Tribunal.

To sum up, there are only some limited extra-charges a landlord or an agent can charge the tenant with:

  • a change or early termination of a tenancy when requested by the tenant
  • utilities, communication services and Council Tax
  • payments arising from a default by the tenant such as replacing lost key

What is your opinion upon the bill? Does it help enough tenants? Are landlords and agents too restricted?

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