Property briefing- A daily roundup of all the key property news and views
Posted by The Oracle Group on 12th June 2019 -
INDUSTRY
Average house price rises by 2.2% in Scotland
The average price of a Scottish home rose by 2.2% to £178,991 in the 2018-19 financial year, according to official records. Overall the value of residential property sales reached £18.2bn, which was a year-on-year increase of 1.6%, Registers of Scotland data shows. Meanwhile, the volume of sales in Scotland was down slightly, at 101,628, in 2018-19. Of the residential sales in 2018-19, 28% were in Scotland’s seven cities with the most sales in Glasgow, while Midlothian had the largest increase in the average price, up by 8.1% in a year. The total market value of all types of non-residential sales last year was £4bn, of which commercial sales accounted for 81%.
Regional divisions emerge over house price optimism
Some 81% of property owners remain optimistic about house price growth in the next six months, although the picture differs depending on the region, a new survey suggests. Those in Yorkshire and Humber and the North West are the most optimistic about their local property market, with 91% of homeowners expecting price rises throughout the rest of 2019, a survey of Zoopla users found. Meanwhile Londoners are the least optimistic, with only 67% expecting rises. And Scots are the most confident when it comes to the rate of increase, expecting prices to rise on average by 5.5%.
Raab would extend RtB to housing association tenants
Tory leadership hopeful Dominic Raab has pledged to extend Right to Buy to housing association tenants. He said he wanted the party to extend property ownership as part of the 'Conservative dream'. At a hustings Mr Raab said: “These are good people, lawyers, professionals, run their own small businesses - they're our people. But they live in areas with high property prices, they can't afford to get on the housing ladder. I say we have to change that.”
MORTGAGES
Mortgage lending grows in solid start to the year
The value of new mortgage commitments rose 4.5% on a year earlier to £63.8bn in the first quarter, according to the Bank of England’s latest mortgage lenders data, which indicated that the outstanding value of all residential mortgage loans rose to £1.45bn - a 3.4% rise on last year. Despite the Prudential Regulation Authority airing concerns over “risky lending,” mortgage loans with a loan to value (LTV) ratio of more than 90% increased to 4.5%, compared with 3.3% the previous year.
Equity release mortgages cheapest in 12 years
The average rate for equity release mortgages has fallen to less than 5% for the first time since 2007, according to comparison site Moneyfacts. The average equity release rate for fixed and variable rate mortgages is now 4.99%, down from 6.11% five years ago. There are 207 lifetime equity release deals available, up from 164 a year ago and 48 five years ago.
Self-employed face mortgage struggle
Three out of four self-employed people say their employment situation makes it much harder to get a mortgage. A major hurdle is having to provide additional documents and being assessed on their past two to three years of earnings, rather than their current income. They also face a more paperwork, and a longer wait for approval to prove they're not a risk, new research by online mortgage broker Trussle reveals. Trussle founder Ishaan Malhi said: "The self-employment sector is growing quickly, but the home loans industry isn't adapting fast enough.”
LEGAL
Regulator to probe unfair property leases
The Competition and Markets Authority is to investigate the property market over potential mis-sold leases and reports of people being pressured into agreeing unfair terms when buying new homes. The regulator said it is writing to developers, lenders and firms that bought freehold rights of leasehold homes, pledging to look at sharply rising ground rents, permission fees to change household items, and other charges that leaseholders are forced to pay.
Hong Kong billionaire sues West End landlord
Samuel Tak Lee has formally launched legal proceedings against West End property group Shaftesbury. The Hong Kong billionaire, Shaftesbury's largest shareholder, is suing over a share placing in December 2017 and is seeking £10.4m in damages. Lee claims the board approached a rival shareholder more than a month before the capital raising, but only notified him on the morning of the announcement.
FIRMS
Brexit bites into Crest Nicholson's profits
Brexit's hold on house prices across the south of England has resulted in Crest Nicholson posting declining profits. Though revenue was £501.9m, up 7% on half-year 2018, profit before tax fell 11% to £64.4m. The company, which partnered with the Sovereign Housing Group in a £230m joint venture in Bristol during the period, as part of its shift from the high-end, south east England-focused housing market to a focus on partnerships, had net cash of £25.6m, less than the £58.2m it had in 2018, and net debt was £68.3m.
Bellway reveals robust performance
Bellway has posted strong sales growth just hours after a fire tore through its Barking Estate development. The housebuilder posted a 4.7% rise in reservations over the period from February 1 to June 2, to 244 per week, and also revealed that it had acquired 10,620 “financially attractive” plots of land to keep it course to meet next year’s growth targets.
CONSTRUCTION
Builders hit by decline in orders
Figures from Bibby Financial Services show that construction firms have seen order books shrink by a third over the past year. Subcontractors said that they had only 19 weeks of work in the pipeline, down from 27 weeks a year ago. Bibby’s study saw a quarter of firms identify Brexit as a significant threat on the horizon, with two thirds saying that they had not prepared for it. Along with Brexit, Bibby noted that late payment problems were "acting as brakes on the sector".
Mandatory licensing scheme for construction industry
The construction industry has developed a mandatory licensing scheme for all UK construction companies. The Construction Licensing Task Force will be chaired by Liz Peace, the former CEO of the British Property Federation. She said: "Mandatory licensing will help drive up standards and help address the issue of quality and professionalism." Brian Berry, CEO of the Federation of Master Builders, one of the organisations backing the new body, added: "The vast majority of builders and homeowners want to see the industry professionalised."
Scottish house completions rise
The number of new homes built in Scotland in 2018 rose by 15% on the previous year, with 20,255 properties constructed. Official data also reveals a sharp increase in housing association properties finished last year, with the 3,823 homes a boost of 54% on 2017, although local authority completions fell by 11%.
Britain lags behind in robo-builders
European construction sector is ahead of the US and China when it comes to the use of robots, according to research. Building sites in Eurozone countries average 1.2 robots per 10,000 workers, compared to 0.2 in the US and 0.1 in China. However the report by ING found a significant difference within European countries, with Britain only boasting 0.3 robots per 10,000 workers, while the Netherlands and Belgium have 1.5 and Germany has 0.8.
RETAIL
Intu deals blow to Arcadia hopes
Shopping centre owner Intu is planning to vote against Sir Philip Green's revised proposals to save his Arcadia retail empire. It is understood the firm does not feel Sir Philip's offer to seek less severe cuts in rent from landlords goes far enough. If the proposals are not passed at a landlords' meeting on Wednesday, Arcadia could fall into administration. Considering Arcadia’s rescue plan, the Telegraph’s Ashley Armstrong says if it does not secure backing “it could be a knockout blow for CVAs more widely.”
Legal challenge to Debenhams' restructuring
Mike Ashley's Sports Direct has launched a last-minute legal challenge to Debenhams' restructuring plans. Debenhams rejected two last-ditch takeover offers from Sports Direct before the keys to its shops were handed over to its lenders. Now Sports Direct has turned to the courts in a bid to overturn a CVA that would see Debenhams closing 50 stores. The legal challenge is being supported by a private Salford-based landlord, while major landlord M&G has launched its own separate legal action.
Select secures another CVA
Creditors to troubled fashion chain Select have backed plans for a second CVA in the last year. The agreement, supported by 87% of creditors, requires no immediate shop closures or redundancies, saving 1,800 jobs at 169 sites as well as its offices and warehouses.
RENTAL
UC blamed for rent arrears rise
MSPs on Holyrood's social security committee have called for urgent reform of the Universal Credit system after an "alarming" number of tenants who rely on the benefit fell into significant rent arrears. A report also says the housing element of UC should be paid directly to landlords as a default, while the minimum five-week delay for tenants receiving their first UC payment must change to help combat rent arrears. Scottish councils are owed a combined total of £21,900,988 in rent arrears, from more than 34,000 tenants who rely on UC.
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