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Average London Rent Hits Record High

Average London Rent Hits Record High

by | Oct 21, 2022 | Latest News

There is a lot of noise at the moment around the UK government, the cost of living, and house prices. It is clear to say that every day seems to be different. As a result of this sadly, 1 in 4 young renters have reported that they are thinking of moving away from London due to the cost of living. With rent and house prices being higher than ever before.

Research shows that the average weekly rent price in London has increased to £553. With the average advertised rent prices increasing by 16.1% over the past year. Charitable foundation Trust for London found that between April 2021 and March 2022 the average rent for a one-bedroom property cost the equivalent of 46.3% of the gross-median pay in London, compared to 26.4% for the rest of England.

London, estate agent Foxtons stated that the increase was due to a combination of demand and a shortage of rental properties. Estimating that of the 23,000 rental properties that came on the market, in September 2022, there would be 29 people competing for one singular property. Furthermore, SpareRoom, a site that helps people looking for flatmates, found that more than seven people are competing for each available space in London. This is almost double the rate compared to the rest of the country. Lastly, Rightmove found there were 9% fewer available properties on the market, with demand for rentals increasing by 20% overall. Therefore, the demand is high however, the number of rental houses and flats in London is down.

Pocket Living build flats for first-time buyers and surveyed 1,000 renters aged 25-45. They found that within the first 12 months, 27% of renters were considering leaving London. Marc Vlessing, Pocket Living’s chief executive, said the situation was “one of the clearest indicators that London faces being gradually leveled down”. However, whilst London has the highest rent in the UK in other places such as Bolton, Walsall, and Salford, they have seen affordability drop the most since the pandemic.

The average price of a property in the UK has nearly tripled in the last 22 years and has increased by more than 60% over the past 10 years. It is difficult to see what the future holds for the housing market in the UK, especially over the long term.  However, many housing experts believe there is a critical requirement for more affordable housing and for developers to build more buy-to-let houses.

Development Finance With BLG

According to recent research, about 145,000 affordable homes will need to be built annually for the next five years to address the UK’s housing crisis. BLG is a leading principal lending specialist in property development finance, we are positioned to help you. Providing residential and commercial finance ranging from £1 million to £15 million we have the ideal skill set to lend and advise. Priding ourselves on fast decisions and flexible terms we can aid you through these turbulent times. Contact our financial experts today who will take the time to get to know you and your aims.

 

 

 

 

UK Residential’s Flight through Turbulence

UK Residential’s Flight through Turbulence

by | Sep 14, 2022 | Latest News

Suraj Lakhanpal, Business Development Director

Navigating Headwinds and Tailwinds facing the Housing Market and Future Living Trends …

 

One may wonder when we will truly appreciate the magnitude of the pandemic’s global impact on the everyday way of living in the UK. Hybrid working has transformed lifestyles, making optimising space in our homes more important than ever. Add to that, the energy price squeeze and cost of living headwinds, making the journey to a new norm longer and more turbulent. But what about those knock-on tailwinds that help our flight accelerate towards our desired destination? Here we observe how headwind events, impacting the housing market, often lead to positive tailwind innovation effects, and to stay relevant, the need to stay on top of future changes affecting the housing market.

It comes as no surprise that Rightmove recently observed that garden offices are now amongst the most sought-after house feature; suggesting the meteoric rise of video conferencing software is here to stay. Indeed, these software tech firms are investing huge sums in the future digitalisation of meetings taking place in the Metaverse. Will VR headsets soon become essential work equipment, to engage with colleagues in your firm’s Metaverse office? Will your avatar, or digital twin, be dressed in formal or casual attire?

Awareness of making UK homes greener, as a critical step in the roadmap towards Net Zero by 2050, is well-known. It is very much seen as the ‘Plan A’ in ticking off the ‘E’ in ESG agendas for most firms operating in the residential sector. For developers and builders, however, new building standards mean more headwinds to navigate; notably a ban on fossil fuel heating systems in new homes from 2025. For larger schemes, that means adoption is needed now to ensure later phased homes are compliant with new rules. Now exacerbated by prevailing energy cost crises, carbon-efficient homes not only mean cheaper bills, but also premium values due to demand from buyers and renters alike.

Whilst new homes and those older stock requiring mortgages will allow the government to lever policy incentives, what about the 10M+ homes owned outright? Whilst energy price spikes will enhance payback periods on green improvements, it remains uncompelling. Rightmove also observed that buyers are starting to negotiate offers factoring in the cost of green improvements. Could the energy crisis be the headwind that pushes older households to finally change flight, to smaller, more-efficient homes so they maintain living standards? In turn, this could become a catalyst that enables younger generations, in their prime home-buying years, to improve older, low-EPC homes stock via greener retrofitting works; ultimately, a tailwind towards destination Net Zero?

The UK’s housing supply-demand imbalance and affordability factors are likely to take several years to fix. Fingers remain firmly crossed that planning departments can be fuelled by government policies towards quicker decisions abilities, to help keep the UK’s housing pipeline engines switched on at least. The coming months may well define currents and effects on house prices – will those doom and gloom headwinds or the supply squeeze in new stock prevail? Future government and monetary policies need to consider proportions and types of home sales sensitive to rising rates in a supply-constrained environment. At what level could interest rates overcome affordability and weigh down on home sales pricing and/or volumes?

A tough set of questions to answer. With a significant pipeline stuck in what feels like a nationwide planning bottleneck, no quick fixes seem possible to cure the shortage of new homes built in recent years. So, in a fast-changing environment, arguably yet to fully embed the global pandemic’s disruption to how we live and work, one could argue that the case for innovation has never been more critical in recent times. Microsoft’s CEO, Satya Nadella, is unequivocal in his belief that “The next 10 years will be a historical inflection point for digital technology, acting as a deflationary force in an inflationary world”. Seeing it as “…the only way to navigate the headwinds we are confronting today.”

How our work and home lives evolve over the next few years remains uncertain in these turbulent times, but looking out for the longer terms of goals and how they apply to construction and the latest living trends are more important than ever to be able to negotiate the headwinds.

Development Finance With BLG

BLG are a leading principal lending specialist in property development finance, we are positioned to help you. Providing residential and commercial finance ranging from £1 million to £15 million we have the ideal skill set to lend and advise. Priding ourselves on fast decisions and flexible terms we can aid you through these turbulent times. Contact our financial experts today who will take the time to get to know you and your aims.

The Rise Of UK House Prices

The Rise Of UK House Prices

by | Apr 10, 2022 | Latest News, Advice

According to data published by the Office of National Statistics (ONS) in March 2022, the average house prices in the UK have increased by 9.6%. This was on average £274,000 which is £24,000 higher than this time last year. According to Zoopla’s data, the typical UK home gained £16,000 in value in 2021, taking it up to nearly a quarter of a million pounds.

When separating the UK, the increase over the year in equates to England £292,000 (9.4%), Wales £206,000 (13.9%), Scotland £183,000 (10.8%) and Northern Ireland £159,000 (7.9%). Research produced by Savills concluded that this annual increase means that, effectively, ‘houses earned more than people’ last year. This is based on the 2021 Annual Survey of Hours and Earnings, that the average UK worker earned £25,971.

Housing Demands

House prices soared during the covid pandemic due to various reasons including stamp duty and the new mortgage guarantee. On 8th July 2020, changes to the tax paid on property purchases were announced. With the knowledge of less overall costs this could have led to sellers requesting higher prices on their properties. In terms of Stamp Duty Holiday, on the 3rd of March 2021, it was extended until 30th June 2021. After which the threshold decreased to £250,000 until 30 September 2021. Yet, tax breaks were originally due to conclude at the end of March 2021.

Buyers therefore rushed their property buying to ensure their purchase was within the deadlines. Thus potentially, affecting the prices within the market. Furthermore, there seemed to be a “race for space” concept. Whereby buyers, surged to invest in larger properties with the new working from home guidelines. Whilst house prices could still stabilise in 2022, demand still remains high.

Will House Prices Drop In 2022?

Rightmove, have reported the number of prospective buyers enquiring about homes was up 15% on this time last year. However, the impact of inflation and the rise in interest rates could still prove to influence the market.

Ross Counsell, chartered surveyor and director at GoodMove, comments “I strongly believe that house prices will finally begin to fall this year. We know the cost of living is continually increasing, with energy prices especially going up in the next few months. With less buyer demand comes lower house prices, and with this in mind, we expect many Brits will have to tighten their belts financially and may not be looking to move home because they may not be able to afford it.”

Development Finance With BLG

BLG are a leading principal lending specialist in property development finance, we are positioned to help you. Providing residential and commercial finance ranging from £1 million to £15 million we have the ideal skill set to lend and advise. Priding ourselves on fast decisions and flexible terms we can aid you through these turbulent times. Contact our financial experts today who will take time to get to know you and your aims.

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