The governments Communities minister has pledged £145 million to assist in the redevelopment of the countries large number of empty dwellings. The money is to be shared out between local authorities and voluntary organisations to bring empty properties back into use. This is desirable for three main reasons not only does it provide much wanted housing but it is a much greener option than new build and it stops the anti social behaviour associated with void properties. It has a knock on effect of making the properties that surround empty properties much more lettable and saleable. These homes are desperately needed by many people who are currently homed in temporary accommodation. When housing benefit is being slashed and councils are looking to increase their income from council tax the move is a real win win for all involved. Some of these vacant properties only require a few thousand pounds of renovation costs to bring an asset worth tens of thousands back into use. So these funds spent wisely could have a huge impact on the number of empty homes in the UK.
There is nothing that warms a landlord’s heart more than increases in both rents, their income and capital values, their net worth. When the two happen concurrently this always increases interest in the buy to let sector. Their Royal Institute of Chartered Surveyors survey reports that 13 percent of their clients are reporting rent increases rather than falls. This demonstrates that UK rents have risen consistently since 2009, many point to the mortgage drought and tighter lending criteria as a factor as it keeps households in rented accommodation and stops them from moving on into their own homes. The lack of mortgage funding lies with the banks and their ability to obtain money supply. There are no signs of a recovery in a bank lending in the short term so it looks a safe bet that rents and rental yields will continue to rise. This will undoubtedly lead to landlords actively looking to expand their property portfolios. House prices in some areas are without a doubt being supported by the value of their rental income rather than their desirability to buyers. It is interesting that none of the sectors pundits are predicting rises when there are increasing similarities to this part in the property cycle in the start of the last boom. Many economists look at the prices to average wage earnings ratio, but if there is one proven fact in the property market it is that the market although constrained by the fundamentals is without a doubt driven by sentiment. The herd mentality is never displayed better than when the property market moves up or down. Once buyers feel motivated to buy more quickly fearing they may become priced out of the market that is when capital values increase rapidly. Once this happens banks themselves are more motivated to lend on an asset that is increasing in value and surveyors are more relaxed about committing to higher values. This gives surveyors the confidence that even if they may have mistakenly over valued a property their mistakes will soon be covered by a rising market. With the opposite being true in more recent times?
The recent cuts announced to the budget for social housing will not only affect tenants but will also have a negative effect on the UK’s construction industry. At a time when there is an increased demand on social landlords and a woefully small number of new homes being constructed in the UK this has come as a considerable blow. This will undoubtedly lead to a short fall of over a million homes in the UK at a time when there are five million people languishing on council waiting lists for homes. With the continued mortgage drought as banks continue to rely on tighter lending criteria to hold down gross mortgage lending. Social landlords have taken advantage of depressed site values and have been either acting as developers or extending their land banks. With the last few years the development and house building sector has been in hibernation and cash has been king so social landlords have acquired some good sites. Sites that perilously would have been difficult for social landlords to secure due to competition from developers. They have been able to purchase village and market town sites that in better times would have been snapped up by developers who could out bid them. This has been because commercial developers have the advantage of increasing specification that is not suitable or would not uplift the gross development value of social housing. Where a social housing developer will focus on value engineering a house builder or private developer will spend more if they can justify an additional return on the additional investment.
House prices have risen in the last quarter with the largest gains not surprisingly being found in London and the south east. The capital has seen rises of over half a percent in the last quarter which has undoubtedly had a big impact in the over UK property market. Further good news for the UK’s residential housing market is that the number of first time buyers registering with estate agents has increased in the last month by just less than half a percent. Although this may seem a minor amount it follows rises of 2.1 and 4.4 in the previous two months. So those allusive first time buyers are coming back to start chains and simulate the rest of the residential sector. The time properties are taking to sell is just over nine weeks with vendors achieving around 93 percent of asking price. With increasing real term mortgage interest rates and concerns over the wider economy prices will not rocket in the near future. There is however signs that many in the property sector are starting to waken from their slumber that started in the beginning of the world wide economic down turn. With increasing good news coming from the commercial property sector starting with the boost in interest in London office. Could this be the beginning of the new upward cycle in the property market?
The capitals property market continues to defy gravity and climb despite the various global and European financial issues. The London market both in residential and commercial sectors has seen impressive gains considering the wider economic outlook. The market has been driven by many factors but foreign investment looking for a hedge bet on inflation beating assets has opted for London property. With events like the Jubilee and the Olympics adding to the desire to own property in the capital there looks like there will be no stop to property inflation in London. Many in the property industry look to the performance of the London market both in residential and commercial sectors as an indicator of the future for the rest of the UK property market. Often referred to as the ripple effect prices will always raise first in the prime and super prime London locations before the capital values of property in the next tier of the property market see gains. Ultimately these gains then spread as buyers start to look at where else they can secure a property as they are priced out of these areas. This simple moves both businesses and home owners onto other large cities like Manchester and Nottingham then as their prices rise onto the next level down the scale. Those that would argue against a brighter future for the property sector should look at recent data showing a 44 percent year on year rise in the construction of new London office accommodation. There will be no fanfare for property price growth in the short term but there are clear signs that the first seeds of growth in the sector are starting to germinate.
There are several things to consider when planning a period property or conservation renovation or restoration. As with any building project there are two distinct stages both critical to the end results, the design stage and the construction phase. The design stage will involve various professionals, architects, surveyors and structural engineers. Choosing your design team like choosing your contractor is critical to the success of the project try and find architects or surveyors that have experience and a good track record with conservation projects. Take some time and speak to experts in the conservation and restoration sectors of the construction industry. It can be a good idea to ask specialist contractors who they have worked with previously and who they would recommend. Having a successful design team who have experience in working with your conservation building contractors is good for two reasons. You have the reassurance that the conservation building contractor who is looking to obtain your business will only recommend building professionals that they know will be confident to assist your renovation project. Also they will probably make it on the tender list and could well become your preferred building contractor. They will already have formed a good working relationship with your design team and will be looking to impress the building contracts administrator with the aim of obtaining further contracts. This is the ideal scenario however the key is to find the correct building contractor as experienced developers and contract administrators will tell is their attention to detail. Two contractors can successful complete a contract to the letter but the results can show a marked difference. With a main contractor who is fully committed to your project and their team passionate about period property restoration the results can be phenomenal. It is the attention to details that will show through, small items like mortar joints and finishing of lead detail that will make or break a project.
British Land the UK’s second largest property REIT has seen rental income for the last year increase by 5.4 percent. This has been due mainly to their continued programme of acquisitions which has assisted in rental income growth. Growth of pre-tax profits has fallen from the previous year due to a lacklustre in commercial property valuations. The organisation has spent just shy of £520 million on commercial property developments and acquisitions choosing to invest some of its war chest of cash. Their strong balance sheet has allowed the company to leverage investment funds at exceptionally good rates. They made some good commercial decisions with the development of the London office properties and have secured some good pre-lets from quality tenants. They have however as most commercial property companies suffered from the challenges of the retail sector. With retailers suffering they are keeping a keener eye on their rental costs. Making upward rent reviews less positive than in better times.
When home owners are planning a home extension or other major building works they are often concerned that they will get the quality and detail in the quotations for their building works. With programmes like rouge traders and cowboy builders it highlights the need for proper documentation and the need to check references. It is also a good idea to use a JCT contract although it will require some work on the both the home owners and contractor part prior to the project starting it does provide reassurance for both parties. A home owners JCT contract can be purchased for as little as twenty five pounds and give details of the works. If you are planning major building works to your home or a home extension it may well be the second largest purchase you will make. So it is important that you have a good document to follow that details exactly what works will be carried out and at what cost. It will detail the work to be done and give fixed cost certainty to each element of your building project and you can also add fixed square meterage prices for less quantifiable items. It also details the payment schedule so you know what you should be paying and when, your building contractor can manage then their cash flow through your building project. It details who has the responsibility for professional arrangements like who has the duty of applying for planning permission. You can also stipulate working times and access so having a relaxed start to your weekend is not disturbed by a hammer drill at 8am or contractors wondering into your home to access the toilet or make a cup of tea. The JCT provides a sensible framework for yourself and your building contractor to work to, you have the legal peace of mind that if there is some disagreement you have a document that can be referred back to and a process for resolving any dispute. It also adds credibility to your project with a document you can keep and hand over to a home buyer in the future showing things have been done correctly and the standards the works have been carried out to. The JCT contract has been well used and tested and is respected within the construction industry.
The Office of National Statistics have released figures that show the construction industry has suffered from a five percent fall in output over the first quarter of 2012. They had previously stated a three percent fall so this has come as a heavy blow to the industry and economists how recognise that construction is a key to a wider economic recovery. The industry has suffered at as a whole but those who specialise in certain sectors like private housing, house extensions, conservation work and specialist contractors for structural repairs have seen more positive times. Public housing construction output has seen falls of over ten percent and private new builds have also dropped. These private developments have fallen back restrained by lending constrictions in both development funding and home mortgages. The private commercial construction sector has also seen a fall of over seven percent as this is the largest of the construction sectors it has had a huge impact on the overall figures. With the Greek crisis rumbling on it looks like the banks will continue to keep the money supply and therefore lending tight. This will continue to hold back private housing developments couple this with government spending cuts and the short term outlook looks to remain less positive.
Savills the property experts have released figures that show an impressive rise in development activity in the commercial property sector. The survey showed that over eight percent of firms questions reported increased activity in the commercial property sector. Not surprisingly the market leading areas were London and the south east. However this is often good news for the rest of the UK as the market recovery always starts in the capital and ripples out to other large conurbations then on to secondary and tertiary commercial property locations. In fact the results showed over double the rises of the rest of the UK. The data also showed just short of a twenty percent increase in those expecting the gains in market conditions to continue for the next coming months. CBRE has also released encouraging data showing a 0.4 percent increase in industrial and prime London office commercial properties over the first quarter of this year.