What’s happening in the UK property market?UK property market 2016

National Lease Hold Survey 2016

Leasehold Property Management

• London has around 38% of total lease hold property management activity, followed closely by the South East (24%) and South West (13%)

• 36% of leasehold property management falls within the 65 plus age range, 51-65 had 31% representation. Whilst 21-30 only contributed 2%

• Only 17% of current lease hold property owners reported they believed they received a good service, compared to 62% who saw either a poor service or no improvements of service over the last 2 years

• 68% of current lease hold property owners felt that the level of service received wasn’t equal to management fees presently charged

• 45% of property management agencies are deemed hard to get hold of when dealing with maintenance queries

• 38% of RMC’s and leasehold property owners saw a benefit in changing management agent, with only 14% seeing no benefit in changing management agent

London School of Economics

• The number of buy to let property owners 55 or over more than doubled in 2004 from 24% to 61% this year

• Buy to let property management under 45 has experienced large decrease from 2004 to 2016, reducing to 20% from 41%

• The research carried out by the London school of economics reports the average age of buy to let property management moving from 35-54 to 47-66

• First time since 1930’s in the UK that the rental market is outperforming the sales market, March 2016 saw a rush of properties purchased with the purpose to let them out before the stamp duty rates changed

• This lead to an increased volume of rental properties advertised, whilst home ownership in the UK hit a 30 year low, mainly due to the South East market outpricing many potential buyers

UK Population 2015-2016

• The UK has a total population size of 64.4 million• 54.2 million make up England’s population• Age range breakdown0-14 17.44%15-24 12.15%25-54 40.74%55-64 11.77%65 or over 17.9%

• Median age for males 40 and female 41 years old• 82.6% of the population live in urban areas

UK regional population breakdown

Most Populated cities in England (not including London)

Most populated areas of London

• Barnet 374,915• Croydon 376,040• Ealing 342,118• Newham 324,222• Enfield 324,574• Bromley 321,278

Residential property sales stats 2016 (properties over £40,000)

• 97,600 sales property transactions up to to November 2016• 10,810 non residential property sales• Over the past 20 years, property prices have increased at an average of 14.34% per annum year on

year

Yearly residential property sales total value• 2011-2012- £794,170,000• 2012-2013- £799,620,000• 2013-2014- £977,510,000• 2014 -2015- £1,033,880,000• 2015-2016- £1,143,560,000

figures from Gov.uk 2016

UK property sales market

• Property prices projected to increase by 2% in 2017, seventh consecutive year of growth (average sales price across the country around £309,000-310,000 mark)

• Sales agreed prices nationally up 5.2% not including London• Number of listed properties for sale down 5% on this time last year (Quarter 4 2016)• IBIS World predicted the UK Estate agent market was worth around 11 billion pounds, had 142,931 employees and just

under 18,000 agencies

Mortgage activity 2016

Regions projected to experience the highest levels of rental growth (2017 to 2022)

• UK 19% across all regions• 24.5% London• 27.5% Bristol• 17% Birmingham• 17% Manchester• 14% Newcastle• 13.5% Leeds• 12.5% Nottingham• 11% Liverpool

Cities with the highest weekly income 2015 (£)

Cities with the lowest weekly Income 2015 (£)

Housing Supply Demand Issues

• By 2020 the UK will need to build 310,000 new homes year on year at current population growth trends

• Presently the UK is only building at 54% of the required target

• The housing report 2025 believes houses prices will increase by a further 50% by 2025, the Government has set itself a target of building 200,000 new homes year on year to stop house prices becoming too expensive and reduce supply issues.

Buy to let market

• Buy to let property sales down 64% compared to last year• The number of buy to let mortgage applications have reduced to 6,000 compared to 10-11,000 applications last

year• 500,000 landlords have looked at the possibility of selling their buy to let properties over the next few years, due

to the scrapping of the landlord mortgage interest tax relief• The English Housing Survey 2014-2015 projected 37% of families with children presently rent from a private

landlord compared to 30% in 2004-2005• 46% of 25-34 year olds are renting, as the first time buyers age increased from 31 to 34 over a 10 year period• 19% of households (4.3 million people) are renting as of 2015• The population bracket aged 20-39 now only has 26% property ownership, compared to 64% in the 1960/1970’s• 14 million people in the UK are registered home owners , 80% of which have a mortgage• 2 million individuals in the UK own a buy to let property• Buy to let properties makes up 14.5% of total mortgages up to Q1 2016• First time buyers mortgage applications were up 33% on last year’s figures

Upcoming changes to the market 2017 onwards

• By 2020, mortgages will no longer be tax deductable, and will based on gross income • Stamp Duty on a second home was increased by 3% in March 2016, including tax at the top end of the

property market• The flat rate 10% maintenance allowance will be be scrapped• As of September 2017, anyone buy to let applications for an owner with four or more properties will have to

have their whole property portfolio assessed as “mortgage arrear rates can be higher when a landlord owns more than one property”

• The stress test will be at 5.5% under the bank of England and rental cover on mortgage repayments must be at least 125%

• Landlords are no longer able to offset all their mortgage interest over the next three years as will become based on gross rental income, preventing rents increasing too much and leading to borrowers using more of their own cash

• Presently over 200,000 landlords are incorporated to gain lower tax rates, with a further 500,000 (25%) looking to follow suit next year

Potential effects on the market in 2017

• Increase in RMC’s • Rent control monitors to be better monitored and implemented• Increase in sales transactions as monthly rental fees continue to grow quicker than sales prices• Less attractive market for investors/landlords with mortgage regulation changes• Property prices to stabilise and grow at a sustainable level as more home owners enter the market• Average property price per sale to reduce as first time buyers enter the property ladder on smaller/cheaper

properties• Developers to expect lower levels of profit but maintain current levels of construction• First time buyers activity to continue upward trend as renting becoming more expensive than purchasing• Banks will be open more to lending as more realistic applications and level of personal debt per person can be

achieved• Property management and ground rent fees to be investigated and profit per unit to be reduced as new

entrants enter the market• Buy to let property portion of sales to increase as landlords no longer can as many tax benefits and will have to

enter future investments using more of their own cash• Review of EU 28 averages in terms of proportion of income spent on rent, rent per month and wages to remain

attractive to EU and non EU citizen job opportunities and cost of living

Produced by Matthew Scott 02/01/2017

Property Button UK Sales Manager

Matthew.scott@propertybutton.io

Mobile: +353 874641388

https://propertybutton.io/services/

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