Confirmation of HS2 route set to create regional investment hot spots

Property markets in regional UK hubs received a boost this month when Transport Secretary Chris Grayling confirmed the majority of the preferred HS2 route from Crewe to Manchester and the West Midlands to Leeds.

The direct benefits of HS2 will reach far beyond the towns and regions directly served by the newly built railway lines, creating property investment opportunities in areas with improved commuter links.

As the full network is completed, new HS2 trains will continue up the East and West Coast Main Lines, serving areas including: Stafford, Liverpool, Preston, Warrington, Wigan, Carlisle, Glasgow, York, Darlington, Durham, Newcastle and Edinburgh.

Said Mr Grayling: The full HS2 route will be a game-changer for the country that will slash journey times and perhaps most importantly give rail passengers on the existing network thousands of extra seats every day. They represent the greatest upgrade to our railway in living memory.”

Looker closer, the western branch of HS2 will continue north from Crewe to Manchester Airport and from Manchester Airport on to Manchester city centre, where a new HS2 station will be built next to Manchester Piccadilly. There will also be a connection to Liverpool and to the existing West Coast main line allowing HS2 services to continue north, serving stations to Glasgow and Edinburgh.

This announcement comes at a time when the UK government has announced its desire to attract £5billion of foreign investment, including Chinese buyers Overseas interest in property in the North of England has increased significantly throughout the course of 2016, with Chinese buyers especially attracted to Manchester, fuelled by President Xi Jinping visit to the city last year.

“Interest for the local property market has increased from Chinese buyers as Manchester’s credentials as an investment hotspot continue to increase, not only leading the Northern Powerhouse but also challenging London as the buy-to-let capital of the UK,” said one Manchester based investment consultancy.

“Accessibility is crucial for overseas investors and with Manchester’s regional airport now welcoming regular direct flights from China, investment to the city is subsequently thriving. We have already witnessed this improved connectivity impact the Manchester housing market, with Chinese buyers able to fly in regularly, sometimes for less than 24 hours, to inspect and purchase property in the city centre.”

Why China’s 2015 State visit will fuel Chinese interest in UK property

Conditions in the UK have got more favourable to Chinese investors in 2015 and should continue to get better in 2016 and beyond, according to a prominent Chinese property portal.

In a year that saw Chinese President Xi Jinping visit the country, website has identified five reasons that more Chinese people will be attracted to investing in UK property. They are:

– The UK Government is set to make visa applications friendlier, as well as increase the number of visa processing centre across the UK. This will be especially appealing to high net worth Chinese people for whom the UK is a popular place for educating their children.

– President Xi’s trip has increased the UK’s profile in China, causing a surge in tourists and consequently the amount they spend here. Barclays Research estimates that Chinese tourists will be splashing a whopping £1billion per year in the UK by 2017.

– Chinese businesses are investing more in the UK. The UK’s Centre for Eonomics and Business Research (CEBR) estimates Chinese investments as a result of President Xi’s visit will be worth £126billion by 2025.

– Chinese companies are becoming increasingly prominent players in UK infrastructure projects. The CEBR estimates that around half of the £126billion Chinese FDI spend in the UK will fund infrastructure projects, giving Chinese companies a chance to expand abroad.

– London remains the number one choice for Chinese property buyers but more are discovering the UK’s secondary cities. Locations such as Manchester, Liverpool, Brighton, and Birmingham are attracting growing interest, thanks to infrastructure upgrades, new developments and keener pricing.

Why the new stamp duty hike could stamp out long-term demand for new homes

The UK’s Government’s decision to raise the stamp duty levied on buy-to-let or second homes, as stated in the November Spending Review, may have investors rushing to complete a property purchase before the change kicks in, but by and large the UK property industry has reacted negatively to the announcement.

Here are snippets from a selection of leading voices in the London property scene, highlighting why the rise could be bad for London’s property market.

Lucy Morton, Head of Residential Agency at WA Ellis and JLL: “It is very disappointing that the Government is discouraging buy-to-let investors by increasing stamp duty land tax (SDLT) on such purchases… The investment community, particularly the individual buy-to-let landlords, will not trust this policy and it could have a negative impact on the demand for off-plan purchases and new homes.”

Andrew Langton, Chairman at Aylesford International:
“In my view this will seriously reverberate on the price of second homes and inevitably lower the prices achieved on property within these sectors. In the longer term such harsh measures could come back to bite the government, as the volume of property transactions will surely slow down resulting in reduced revenue for the Treasury.”

Tony Wright, partner and national property consultant at Carter Jonas:
“Less residential investment activity is traditionally seen in the winter months. However, this new legislation could create a surge in demand, as landlords look to beat its implementation date. Conversely, once it comes into effect, this, coupled with other recent legislative changes on the reduction of tax relief on buy-to-let mortgages, could deter all but the most determined non-professional buy-to-let investors from expanding their portfolios.”

Marc von Grundherr at Benham & Reeves Residential Lettings:
“For years, buy-to-let has been touted as an alternative to pensions. Today’s move will force many to leave the sector altogether, increasing their dependence on the state and diminishing the overall number of properties available to tenants. This, in turn, will invariably lead to increased rents and falling property standards. The Chancellor has unilaterally decided that buy-to-let landlords are responsible for pushing house prices beyond the reach of first time buyers. This is ridiculous. A lack of homebuilding has pushed up prices and we also have to look at first-time buyers themselves. We’re also seeing a shift in expectations from the Millennial Generation. They’re less willing to go into ungentrified areas, renovate properties themselves or even save for years for a deposit. I couldn’t afford to buy in Chelsea as a first time buyer, either. Don’t blame buy-to-let landlords who are simply trying to supplement their derisory pensions.”

An unusual opportunity to enter the UK online property market

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And it’s a world of online searches that’s unusually large. ‘Property in UK’ is part of a family of terms on Google that attracts over 1.5 million searches a month – a potential audience that this site has the potential to play a strong role in capturing. And that’s a conservative figure – Unique Visitor data from the market leading portals suggests that at least 40 million people within and outside the UK search for property in this country every year.
Therefore, offers anyone seeking to establish a presence in the UK property market all of these advantages. As owners of this site we’re open to ideas and partnerships on how to develop this unusually strong online business platform, as well as being open to offers to acquire it.

We already have a strong track record in property. This site is affiliated to one of the leading overseas property websites specialising in Turkish property for sale – Spot Blue – as well as a winter sports property website,
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Prime Central London – a property market serving 35 foreign nationalities!

New research reveals the true breadth of nationalities purchasing residential property in central London, highlighting that the market is far from limited to Middle Eastern and Russian buyers.

A report by property consultants Black Brick, which tracks purchases over the past eight years, shows that the firm has represented 35 different nationalities, with Africans forming the highest percentage of buyers at 43.7 per cent of all deals. Second are Middle Eastern buyers at 17.1 per cent and then tied in third place are Asian and UK buyers at 10 per cent each.

Camilla Dell, Founder and Managing Partner of Black Brick, comments: “Although the perception is that the majority of Prime Central London’s overseas buyers are Russian or Middle Eastern, Africans have always had a big affinity with the UK and London. Over the last eight years, we have successfully acquired £236 million of residential property for African buyers from Nigeria, Kenya, Zambia, South Africa and Uganda.

“In particular, we’ve represented numerous buyers from Nigeria. Like a lot of our owner / occupier international clients, many wealthy Nigerians were educated in the UK and send their children to school here. Typically, Nigerians like gated, secure developments, as this is what they are used to back home, where most houses and apartments are located within secure compounds. Even though London is of course, much safer than Nigeria, they still prefer to be in secure developments, preferably with a 24 hour concierge or porter.”

Black Brick’s Asian data also highlights some interesting trends – 68 per cent of their Asian client base are Malaysian, followed by 25 per cent from Singapore and six per cent from Hong Kong. Overall, 50 per cent of Black Brick’s Asian clients are investors and 50 per cent are buying homes.

In the Middle East, Black Brick has represented buyers from Egypt, the UAE, Saudi Arabia, Jordan, Kuwait and Lebanon. The highest number of buyers have come from the UAE, forming 38 per cent of Black Brick’s Middle Eastern client base, followed by Saudi buyers forming 19 per cent and Egyptian buyers forming 15 per cent, with the latter having the largest average budgets at £5.175m. Of these buyers, 77 per cent have been owner occupiers, and just 23 per cent have been investors.

“In terms of future ‘one’s to watch’ there is vast quantities of wealth being generated from Angola,” Camilla adds. “Typically, Angolans have tended to buy in Portugal due to the fact the language is the same. However, we predict that it will only be a matter of time before Angolans start to diversity and look to London property. As markets mature and clients look for other ways to spread and diversify their wealth, London eventually ends up on their radar.”

Low-end prime London rentals down, while three-beds are in high demand

As the lettings market in London continues to thrive, a leading national estate agent reports a strong demand in the more expensive end of the rentals market, as well as a shortage three-bedroom homes.

Owning a three-bedroom property is good news for landlords in London in 2014. They make a safe investment thanks to having such broad appeal – prospective tenants include young couples, small families and older couples looking to downsize. At a time when there has been a surge in working from home, having a spare room to use as an office is also very attractive to tenants.

“The demand for three-bedroom homes for rent in central London is seemingly insatiable,” said Zoe Rose, Head of London Lettings at Strutt & Parker at the end of October. “As soon as we get a good one on our books, it lets in a flash. We recently let a three-bedroom lateral top floor apartment on Cranley Gardens in South Kensington for £1,300 per week within two days on its first viewing – and similarly we let a three-bedroom apartment on Ladbroke Gardens within one week for its asking price of £1,500 per week.”

Meanwhile, Strutt & Parker’s latest figures for lettings transactions in the third quarter of 2014 indicate that it’s the larger, more expensive properties that are performing most strongly. When compared to the same period last year, transactions are up 18.4 per cent for properties between £2,000-£2,999 per week, up 14 per cent for properties between £3,000-£3,999 per week and up 16.7 per cent for properties over £4,000+ per week.

However, lower priced properties costing less than £999 per week to rent, were down 7.5 per cent on last year – and properties between £1,000 and £1,999 per week were also down very slightly by 1.4 per cent.

Zoe Rose predicts that 2015 will be a good year for landlords with property in prime central London: “We are anticipating a slight uptick in lettings prices in prime central London for 2015 – a 2.5 per cent increase; and we’ve already seen two per cent growth for lettings in 2014. This slow but steady growth will be underpinned by the simple fact that there are still so many people out there that can’t afford to buy a home in London and these people will continue to rent. Not to mention the large number of people who enjoy the flexibility of renting – global, nomadic types who we refer to as ‘Glomads’. The threat of rising interest rates rising will also play an important contributing factor.”

Price growth to slow in 2014-15 but surge after the election

Prime Central London (PCL) house prices will grow three per cent in 2014, followed by two per cent 2015, according to a leading London property consultancy.

After the forthcoming general election however, consultancy Strutt & Parker predicts prices in PCL to rise 6.5 per cent in both 2016 and 2017. Meanwhile, its predictions for homes across the UK as a whole are more bullish – nine per cent growth in 2014, followed by five per cent throughout 2015.

These forecasts are a stark contrast to 2010 and 2011 when PCL prices surged by over 13 per cent year-on-year.

Whilst improved economic foundations would certainly suggest that prices will continue to rise over the next few years, the biggest perceived uncertainty surrounding the property markets over the remainder of 2014 and 2015 will continue to be the looming election.

Stephanie McMahon, Head of Research at Strutt & Parker, explains: “Agents are reporting a continued slowdown in some areas as buyers and sellers nervously await news on the upcoming General Election and the potential for Mansion Tax. This is beginning to feed through into transaction levels. As is often the case in uncertain times, it may also be that transaction levels will decrease in the run up to May 2015, but values could hold up better than expected.

“Above and beyond the General Election there are a number of other potential headwinds slowing the property market, including talk of interest rate changes and the Mortgage Market Review (MMR) and the slowdown it is causing.”

“The main driver for price market price growth in recent years has indeed been the consistent shortage of good quality housing stock in highly sought after prime locations. Any future increase of supply to the market in central London would therefore put downward pressure on PCL house prices and we have taken this into consideration in our London predictions.”

Prime Central London – which sector of the market will you find bargains?

There are bargains to be had in Prime Central London if you look beyond stamp duty, an independent property consultant with more than 25 years’ experience said in October.

Following the 2012 budget, stamp duty for properties sold over £2million rose to seven per cent. Since this announcement, sales of homes in the £2-£2.5million price bracket have fallen by over 30 per cent, but in contrast, homes valued under £1.5million fell by just 3.4 per cent, according to agencies’ analysis. Additionally, more than half of all properties in London’s Prime Central areas have been withdrawn unsold in the six months to the end of June, according to further research.

A leading property consultant commented “The £2-£2.5m sector of the market provides a real buying opportunity because people are reluctant to pay more stamp duty. There is a real psychological barrier to passing this mark, despite ability to access the £2-2.5m market – where we are seeing some significant reductions in price.

“Recently, a client of mine provided me with the brief – a three bed investment property in the Knightsbridge area for less than £2m. Knowing the clients taste I knew it was going to be tough, finding a two bed with his requirements would be achievable but a three bed would be a stretch.

“After showing him properties on the market in line with his brief, we had a frank discussion about surpassing the £2million mark. Soon after, I took him to see a £2.5million property, which was being sold off market which he wanted to put an offer in for. Following tough negotiations, the property was brought for £2.1million. This deal was possible as this area of the market, £2m plus, has slowed right down and in order for vendors to sell they have to be realistic about market value. Buying agents, like myself, are far better placed than estate agents to secure these deals as we prefer to work off market as we aren’t representing the vendors.

“With Labour plans for a Mansion Tax now in the open, it’s likely that properties above £2m are likely to see further reductions, so I expect to be able to identify real value for clients looking in this range.”

£2.5m-£5m London market seeing most activity in 2014

Prime Central London (PCL) property transactions are stabilising, according to a leading property consultancy, with sectors of the market recording year-on-year growth.

Research by consultancy W.A.Ellis shows that between January and August 2014, there were 1,242 PCL transactions compared with 1,288 for the same period in 2013, which represents a year-on-year reduction of just 3.5 per cent.

Whilst the Damoclean sword of mansion tax continues to hover over the PCL market, these figures suggest that it has not as yet impacted. Indeed, sales between £2,000,000 and £5,000,000 have increased by 11.7 per cent this year, added W.A.Ellis.

However, sales of properties over £5,000,000 have diminished by 5.5 per cent. The reduction in activity in the £5,000,000-plus bracket is perhaps indicative that the foreign investor may tolerate a tax of £15,000 per annum (based on the current ATED charges) but not the more punitive £35,000 charge per annum currently applied to properties held in company names with values in excess of £5,000,000.

Meanwhile, in the London lettings market August had a surprisingly high level of activity in what is usually a very quiet month – according to W.A.Ellis, there was a 14 per cent increase in tenancies starting compared to the same month last year.

A spokesperson said: “The seasonal student market is in full swing, with students focusing on finding accommodation for the upcoming year and demand exceeding supply. We agreed two ‘Face-Time’ deals this month… in South Kensington and Hertford Street.

“This highlights a new breed of techie tenants who are savvier than ever before in their approach to the property market. We are also noticing an increasing trend of tenants coming back to the market and looking for new rental properties as a result of their landlords opting to sell ahead of the new capital gains tax, which is set to affect foreign owners from 6th April next year.”

Rejection of ‘Boris Island’ development a boost for Thames Esturary prices

News that the Airports Commission has rejected a new airport in the Thames Estuary – championed by Mayor Boris Johnson – as a viable solution for London’s air traffic expansion needs is expected to boost the property markets in those areas that would have been affected, namely Thames Estuary, Medway and South Essex.

Research by an on-line property portal showed that in February, Medway had a demand index of 59 per cent, the 15th best place in the UK for demand versus supply. But in July this dropped to 37 per cent, a 22 per cent reduction in buyer demand and confidence, which was more than any other large town or city in the country.

“With the sinking of Boris Island, we now predict local property prices taking off,” a spokesman for the portal said. “In our Property Hot Spot Index release in June, Medway, the epicentre of properties that would potentially be affected by Boris Island, saw the biggest fall in demand of all UK areas. Consequently we are predicting a significant rise in house prices along the North Kent coast now that Boris has lost the battle of the skies in the Thames Estuary. If you live in the Medway area, Canterbury, Whitstable, The Isle Of Sheppey etc, expect to see a rise of at least 20 per cent plus in the next 12 months.”

It is not good news for all homeowners in the local area as the development of Thames Estuary airport would have seen huge investment into transport links in Chatham, Ebbsfleet and Southend, which would have helped increase property prices because of the lucrative London commuter factor.

It’s not yet known where an airport expansion will be confirmed in the South East, however property prices in Gatwick and Heathrow are unlikely to see such change as they already have established airports.