The good news for house builders is coming in thick and fast, Persimmons the York based house builder has seen profits up 55%. Redrow has seen profits rise by an amazing 80% with Barret developments turning a 9 million pound loss in to profits of over 12 million. So what is going on? The housing market is still in the doldrums but the profits for new build speculative developments are rising. Developers are increasing profits by carefully targeting the type of properties they build out. Some are readdressing planning applications for speculative development sites. Those companies that are cash rich are making money simply by buying speculative development sites at discounted rates, some from banks and liquidators and from other developers looking to liquidate their land banks. So those canny investors should watch the share prices of this out of favour stock sector. The recent return of the 95% mortgage has yet to fully filter through to the market place, so although the property sector is still fragile I am confident we are back on the upward part of the property cycle.
A property in Wolverhampton has collapsed after building work for a home extension was carried out on the neighbouring property. Local residents reported hearing a terrific noise like an earthquake as almost half the house collapsed in the early hours of the morning. The local building inspectors have launched an investigation into the contractors who carried out the work after speculation that they had removed too much earth at one go and undermined the neighboring properties footings. The structural engineer attending site said that this type of incident is very rare and again speculated on poor building practices.
Increasingly in modern home extensions steels and ridge beams are being used to give the home owner the large open plan living spaces they desire. With more and more home owners planning their home extensions to include warm roof or open loft designs. The construction details require RSJ’s or ridge beams to compensate for the lack of triangulation of the roof structure. So in come the ridge beams and heavy rafters and out go any plans for trusses. Another popular feature to the modern home extension is the bi-fold doors. These often span large openings and require RSJ’s or specialist lintels to support masonry or the roof above. Even roof design is being considered much more than it has been in the past, many home owners will no longer opt for a traditional flat roof. They want EDMP or other rubberoid roofing solutions with longer guarantees, many are choosing to disguise their flat roofs with a parapet wall and attractive copers to give a contemporary feel to their home extension. This is causing a challenge for those one man band builders who traditionally carried out home extensions. They do not have the man power or expertise to deal with seven meter long steels and complex roof structures. So if you are choosing a contractor for your home extension make sure they have the experience in structural steel work. This thought will be paramount in many people’s minds in Wolverhampton after a property collapsed after building work for a home extension was being carried out next door.
There is increasingly evidence of a stabilisation of the housing market in the US with purchases of new builds at a one year high. The increase is seen as a result of improving labour conditions coupled with a general improvement in the US economy. The supply of homes for sale in the US is at its lowest rate since 2006. Those that forecast London prices use the US and auction results as two of their key performance indicators for their predictions of the UK housing market. This will be welcome news to the UK’s house builders and land agents many have been stuck with marginal land and stock. They are waiting for the market to recover before building out potential development sites.
Since it’s much hyped launch the governments “New home bonus scheme”, has been closely watched by industry pundits. The first signals are that some council are using the scheme to redesign properties as HMO’s (houses in multiple occupations) rather than as a useful tool to produce more low cost development sites. Initial figures show that just short of a third of all the properties to be put through the scheme are not new builds. So what would be the best use of the government’s efforts to increase the new build housing stock? I would suggest that efforts were wholly focused on the UK planning system.
Did you know under part “F” of the UK building regulations that all mechanical ventilation systems must be commissioned by a competent person? Like Gas Safe or NIC there is a body that looks after domestic ventilation commissioners, this is BPEC. If you chose a BPEC approved ventilation specialist you will be able to claim extra points against your SAP rating. BPEC qualified commissioners will use an Anemometers for checking the air flows from any domestic ventilation systems. These systems include MHRV and PIV’s (positive input ventilation systems), and it’s a surprise to many that standard intermittent or continuous single point extractor fans also require certification. The legislation has been driven by the increase in the use of Mechanical Heat recovery ventilation systems and positive input ventilations systems but also covers standard kitchen and bathroom fans. How many building inspectors know that they should have a BPEC qualified engineer sign off document as well as a part “P” electrical and Gas Safe certificate prior to realising the building regulation completion certificate? How many home owners are missing out because the expensive Mechanical Heat Recovery Ventilation system they have paid for is not fitted or correctly balanced? Condensation can be one of the common problems associated with Mechanical Heat Recovery Ventilation systems when they have been incorrectly installed and commissioned. In fact MHRV systems tend to be trouble free and provide 96% heat recovery if correctly fitted, but say an installer has not fitted a condensation trap or insulated the exhaust leg of the ducting system with insulated duct problems can occur. The air being expelled can condense on the final ducting leg and condensation can form on the pipe and run back into the unit or ceilings. Many installers think that a little drop of condensation will not cause any issues, they are probably correct what they fail to realise is that a MHRV system can produce eight litres a day. So if you have an incorrectly fitted MHRV system you could risk having the unit short under water ingress and have your ceilings collapse. This is why you should make sure you see your BPEC approved commissioner’s photo I.D. card.
Rightmove sees the best January ever as the pent up demand for houses continues to grow. The slightly improved availability of mortgage funding coupled with a record number of bargain properties is attracting more potential purchasers. Rightmove has reported an incredible number of hits nearly 800 million eclipsing its previous record in May of 2011. This is almost a million hits an hour, whatever spin economists may put on it certainly shows a large interest in property for sale. Interestingly this takes rightmove to number seven on the most viewed website chart. With the end to the stamp duty holiday for first time buyers in sight many are looking to lock in that saving before it is too late.
Great news for the property and construction industry as the number of new mortgages in January hits nearly 60,000. The increasing number of mortgages available to home owners with smaller deposits and a fresh appetite to mortgage back securities has boosted these figures. The figures are very encouraging as they show an increase on mortgage lending for the same period last year of 29 percent and an increase of 11 percent on December’s figures. The numbers show the pent up demand from first time buyers many who have homes in mind and are simple unable to finance their dream homes.
The last year has seen the number of buy to let properties expand by an impressive 20%. Banks are keen to point out that they are not favouring buy to let landlords over first time buyers. If you ask yourself how you would behave if you had to reduce the banks risk would you lend to highly geared first time buyers with a limited track record? Or would you favour experienced landlords who probably have other assets in the back ground? Many landlords are the cash rich in their 40’s and 50’s who are just buying one or two properties to help supplement their depleted pension pots.
Well it’s not surprising with 1 in 7 UK high street shops stood empty, the bad news for retailers is experts in the sector are predicting further closures as more consumers switch to online retailers. Last year the number of empty shops started to flatten out with just less than 15% or around 50,000 vacant commercial retail properties. This was not helped by a large number of high profile retailers going into administration. Yet again it is the high streets in the south that are bucking the trend strengthening the north south divide. Some of the secondary retail areas seem to be locked in a slow cycle of decline with the least attractive high streets with the lowest foot falls perhaps consigned to history. It is simple supply and demand with online sales doubling over the last decade. There is simply not the demand for retail premises that there has been historically. So what will happen to these empty properties? Some will be demolished and but others may be converted to other use classes, some lend themselves to services offices and others residential use. Clever property owners will look at their portfolio of commercial investment properties and look at conversion of the upper parts to maximise their rental income.