Tag: housing

Housing developer awards £5000 to local good causes

A SCOTTISH housing developer has recognised the dedication and positive impact of five good causes in the Musselburgh community, awarding each with a £1000 grant.

The Dundas community fund – which had been extended to allow more time for deserving groups in and around Musselburgh to apply – came to a close at the end of July.

Hollies Community Hub, Blue Triangle Housing Association, First Step Community Project, Changes East Lothian and DadsWork were the chosen recipients, with each playing a vital role in the local area.

The roll out of the £5000 fund came as the Livingston-based firm launched its 140-home Wireworks development in the seaside town, forming part of its pledge to deliver lasting benefits to Musselburgh, in addition to contributions of up to £400,000 towards schooling and infrastructure.

Craig Fairfoull, Head of Sales and Marketing at Dundas, said: “We were thrilled that the decision to extend the community fund resulted in four times the number of original applicants.

“It did, however, make the decision to choose just five recipients out of a strong, deserving and varied group of applicants that bit harder.

“It has been a real pleasure to learn about each of the applicants, their inspiring causes and their contributions to the local community – I’d like to thank each and every one of them for their interest in the fund and wish them every success in achieving their project’s endeavours.

“While it has been a challenging task, we are really pleased to be able to announce the five recipients of the fund and believe that their initiatives are essential in supporting the local area.”

Hollies Community Hub, an organisation which aims to help elderly people in Musselburgh retain their independence by providing them with a safe space where they can engage with and meet their friends, will be using the £1000 fund to organise fun excursions to the East Coast for its members.

Liz Shannon, Manager of Hollies Community Hub said: “The Hollies would like to thank Dundas for allowing us to take our lunch club members for a much-needed day out. 

“After nearly two years of social isolation, a trip down the coast with a fish supper and ice cream will be a day for them to remember and a chance to reminisce with their friends about past trips.”

Blue Triangle Housing Association is a supported homeless accommodation service which houses up to 14 young people at a time, helping them gain independent living skills. The community fund will help the group revamp its enclosed garden area to provide its tenants with a safe and secure communal area for socialising.

Steven Cranston, Assistant Project Manager at Blue Triangle said: “We are so thankful and grateful to Dundas for this opportunity. Our garden area can now be upgraded, which will provide our service users with a space to relax while also giving us the opportunity to teach them how to grow fruit and vegetables and how to then be self-sustainable by cooking what they grow.”

Set up by a group of local parents over 30 years ago, First Step Community Project works within the close-knit Musselburgh community supporting vulnerable families who are facing extreme financial difficulties during the current cost of living crisis.

With its funding from Dundas, the group will be issuing Winter Warmer Packs which seek to provide families with essentials such as hot water bottles, flasks and thermals, as well as useful information on how to help save on energy bills while keeping warm and healthy over the winter period.

Jennifer Mitchell, Early Years Manager of First Step Community Project, said: “From the bottom of our hearts, we would like to thank Dundas. We will now be in a position to help families and community members ahead of what’s expected to be a very tough winter.”

Changes East Lothian is a mental health and wellbeing charity which provides free support services for over 16s living, or registered with a GP, in East Lothian. The charity provides counselling, therapeutic and peer support groups, as well as a wide range of activities and volunteer opportunities. 

Marina Ramsay, Communications and Engagement Officer at Changes said: “Accessible mental health support is crucial for the happiness and wellbeing of people in communities across East Lothian and the funding will allow us to reach even more people, reassuring them that help is within reach and they don’t have to face challenges alone. We are incredibly grateful.”

DadsWork, a charity that delivers much needed support and services to men, fathers and male carers, will be using the fund towards its four-week programme for new expectant dads which aims to increase their confidence as they prepare for fatherhood.

Kevin Young, Project Manager of DadsWork said: “As a charity, we are delighted to be awarded £1000 from Dundas. As we know, emotional, practical and physical support for men is vitally important and this support should be readily accessible and offered locally. DadsWork and its beneficiaries thank Dundas for their donation and the benefits it will bring.”

Dundas has a mission to create homes that make people feel great. Headquartered in Livingston and proudly Scottish, it has a track record of building well-designed homes that are higher spec than a vast majority of competitor properties.

The independently-owned developer is focused on building welcoming, integrated communities and making the journey of buying a home more straightforward, inspiring and fun.

Through a partnership with Tesco, East Lothian Council and NHS Lothian, Dundas acquired The Wireworks site after receiving planning permission to regenerate the former Brunton Wireworks site and neighbouring land in 2008.

The development will have the capacity to store 140 bicycles in internal and external bikes stores. Electric car charging facilities will be available throughout the development. Private gardens and balconies will also be available at various apartments.

To learn more about The Wireworks visit: 

https://www.dundas.co.uk/developments/the-wireworks, call 0131 243 3858 or email: thewireworks@rettie.co.uk

Edinburgh appeals for emergency funding to tackle housing crisis as council considers rent freeze

The City of Edinburgh Council is to write to the Scottish and UK Governments to request emergency and long-term funding to address the scale of Edinburgh’s housing pressures.

It follows a decision taken by the Council this week (Thursday 22 September) to consider freezing tenants’ rents for a third year in a row, in response to the cost of living crisis. The Council Leader will also write to the Scottish Government requesting that the rent freeze across private and social rented homes is maintained until rent controls are in place in Edinburgh.

Moving the motion, the Housing, Homelessness and Fair Work Convener Councillor Jane Meagher described the option of another rent freeze as “a humane response to a massive debt crisis where people are facing the toughest financial squeeze of their lifetimes.”

Instead of a rent consultation, the Council will invite tenants to share views on the financial challenges they are facing in relation to the cost of living crisis – including rent, food, energy and insulation – which will involve tenants’ representatives and inform the work of the Edinburgh Partnership and Poverty Commission.

Officers have also been asked to bring a report to a meeting of the Housing Homelessness and Fair Work Committee on the implications of a rent freeze for council tenants in 2023/24, the subsequent impact of this freeze on the Housing Revenue Account over the next three years, with a detailed financial strategy.

Cllr Meagher said: “We are all in the grip of a cost of living crisis but it is our most vulnerable residents who are on the frontline. Elderly people, those with young families, residents who are ill – many tenants are already facing extreme financial hardship and are struggling at supermarket tills and with their energy bills.

“We shouldn’t need to add the unbearable burden of a rent rise to that, and we must provide a level of continuity in these uncertain times. It is a difficult decision to take, however, because the money paid by tenants in their rents pays for our Housing Service and enables us to borrow money to improve Council homes and build new affordable housing.

“With construction costs also rising – and without additional support from government – keeping rents the same will without a doubt make our newbuild programme very challenging.

“I’d like to thank Living Rents for joining our Council meeting to highlight the challenges which lie before us. Council Leader Cammy Day will now detail the scale of Edinburgh’s housing crisis to government, requesting both emergency and long-term funding to allow us to purchase and build more homes for social rent.”

Bield is ready for the next chapter

In-person engagement events return to inform housing services of the future

ONE of Scotland’s leading housing specialists is looking to the future as it returns to an in-person AGM after a two-year hiatus.

Sustainability and the cost-of-living crisis will both sit top of the agenda at Bield’s AGM – which is due to take place this week – with over 100 employees and members in attendance.  

The AGM will be held on 22 September at Edinburgh’s Apex Grassmarket Hotel, with a mixture of staff, members and Board members in attendance to discuss the challenges and opportunities facing the industry.

Long-service awards will also be presented to celebrate loyal staff and recognise their outstanding contributions.

There will also be a new addition to the AGM in the form of a staff conference. The conference will be held on the same day to bring together staff who will be overseeing and implementing changes to policy and practice over the coming years.

Dr Lynne Douglas, Chief Executive, Bield Housing and Care.

Dr. Lynne Douglas, Chief Executive at Bield Housing and Care said: “This year we have been working on setting the direction for the next five years, listening to people’s views and pulling them all together into a coherent plan that we are excited to launch in 2023.

“The industry has weathered tough storms over the past few years and we are delighted to look forward and celebrate and acknowledge the hard work of our staff in person. Both our tenants and staff continually drive us forward to achieve the best we can, and that is what helps us through periods of uncertainty.

“We’re delighted to be back hosting our AGM in person and look forward to catching up with members to hear about their experiences over the last year.

“It’s also really exciting to be adding an extra element this year in the form of our staff conference. This event will play a vital role in contributing to our next strategy and shaping the Bield of the future, while providing an opportunity for staff to network and create connections”.

One key element to be discussed at the AGM is the need to focus on sustainability. Bield recently announced the launch of its Energy and Environmental Policy which commits to reducing its carbon footprint by 90% and reaching net zero by 2045 at the latest.

In addition, Bield has also created new sustainability-focused roles in the form of a Net Carbon Manager and an Energy and Sustainability Manager.

Dr. Lynne Douglas added: “There are positive changes and policies being implemented across the organisation which present a real opportunity for tenants and staff to shape the services Bield provide.

“We’re all very much looking to the future with optimism and these events provide a vital platform to discuss the opportunities and challenges ahead.”

Bield is a registered charity dedicated to providing flexible and high quality housing solutions and support for older people.  Bield Housing and Care has around 180 developments across Scotland, providing independent living for those over 50 years old.

To find out more about Bield, visit https://www.bield.co.uk/housing-and-other-services or follow on Facebook @bieldhousingandcare and Twitter @BieldScotland.

Scotland’s house price growth continues to 9.1% Walker Fraser Steele’s latest House Price Index

Walker Fraser Steele’s latest House Price Index

  • 11 Local Authorities in July experiencing record average prices
  • Argyll and Bute has highest annual growth rate at 18.1%
  • Semi-detached properties have highest price growth over the year
  • Average Scottish house price now £224,035, up 0.8% on June, 9.1 annually

Table 1. Average House Prices in Scotland for the period July 2021 – July 2022

Scott Jack, Regional Development Director at Walker Fraser Steele, comments: “The average price paid for a house in Scotland in July 2022 is £224,035, establishing yet another record price for the country – the thirteenth occasion that this has happened in the last thirteen months.

This price is some £18,600 higher than that seen in July 2021, indicating that prices have risen by 9.1% on an annual basis. This annual rate has slowed from the 10.6% growth seen in June, but that month was assisted by a near £3,000 fall in prices which occurred twelve months earlier in June 2021, meaning that the base point for measuring June’s growth rate started from a particularly low level. On a monthly basis, prices in July increased by some £1,725, or 0.8%, which was close to £500 higher than the increase seen in June – continuing the bi-monthly oscillation in prices in 2022 that can be seen in Table 1 above.

Figure 1. The average house price in Scotland over the period July 2020 to July 2022

While prices continue to increase, there is some evidence that the number of housing sales in Scotland is beginning to slow – although a number of surveyors in Scotland believe this to be a regular feature of June and July’s housing market, coinciding as it does with the school holidays, when families are likely to be distracted by matters other than buying a property. It is therefore difficult to draw conclusions from the observed shortfall of sales in June, and to a lesser extent July.

Looking at Table 2 below, which illustrates the change in prices by property type, there is a far smaller difference between the property types in July 2022 than there had been in March 2022.

March 2022 shows a ‘pandemic-led’ increase in prices with detached properties having the highest growth in prices, and flats the lowest. However, in July this position has changed, with semi-detached properties seeing the largest increase in prices while detached properties are second lowest.

The change in growth rates of the different property types highlighted in Table 2 may suggest that the importance of ‘lifestyle-changes’ in the decisions involved in buying a property have shifted over the last few months, as the pandemic becomes less of an influence on peoples’ lives. Or alternatively it may just reflect a change in the mix of those who have purchased properties during the school holidays. We will have to wait and see what happens when the schools return this autumn, and families contemplate their next move.

Transactions analysis

Figure 2 below shows the monthly transaction count for purchases during the period January 2015 to July 2022, based on RoS (Registers of Scotland) figures for the Date of Entry. (July 2022 totals are based on RoS Application dates.)

It can be seen that the June 2022 total is the second lowest transaction count of the eight years shown in Figure 2, with only the June 2020 total being lower. (June 2020 was only three months after the start of the pandemic). Although the July 2022 total shows a small increase in transactions compared to June 2022, the current figure for the month remains an estimate, so at this stage not too much weight should be given to the predicted rise in sales.

RICS (Royal Institution of Chartered Surveyors), in its July 2022 Residential Market Survey, is pointing to an easing in sales market activity, with metrics on demand and sales remaining in modestly negative territory over the month. RICS add that for the time being at least – underpinned by the low levels of supply available for purchase – prices continue to rise across all parts of the UK.

Figure 2. The number of sales per month recorded by RoS based on entry date (RoS applications date for July 2022), for the period 2015 – 2022

Scotland transactions of £750k or higher

Table 3. The number of transactions by month in Scotland greater than or equal to £750k, January 2015 – July 2022

Table 3 shows the number of transactions per month in Scotland which are equal to or greater than £750k. The threshold of £750k has been selected as it is the breakpoint at which the highest rate of LBTT becomes payable.

Table 3 shows that there were 81 sales in excess of £750k during July 2022, and we anticipate that this number will increase as further sales for the month are processed by the Registers of Scotland. It is however doubtful that the July 2022 total will exceed the July 2021 total of 120 sales, which again suggests a slight cooling in the high-value sales market, consistent with the RICS Residential Market Survey quoted earlier. However, the total for July 2022 of 81 high-value sales still exceeds all the prior years’ July totals, except for 2021, indicating that the “lifestyle changes” associated with the pandemic – “working from home” and the “race for space” – are still features of the current housing market, even if their prominence is beginning to wane. This, as discussed on page 7, has resulted in strong competition for the properties that meet these requirements, with substantial price rises still being experienced at the top-end of the market.

A similar picture can be discerned from looking at the totals for the eight years covered by Table 3 above. It is clear that after seven months, the 2022 total already exceeds each full year from 2015 to 2018, with 2019 highly likely to be surpassed next month, and 2020 following suit shortly thereafter. It can also be seen that the sum of the first seven months of 2021 amounts to 590 sales, meaning that 2022 is not too far behind the previous year’s total at the same point in the year.

The five authorities with the largest number of the 578 high-value sales that have been recorded to date in 2022 are: Edinburgh (294); Glasgow City (37); Fife (32); East Lothian (28); and finally East Renfrewshire (20). From these figures can be seen that in 2022, Edinburgh accounts for just over half of this sector of the housing market

Local Authority Analysis

Table 4. Average House Prices in Scotland, by local authority area, comparing July 2021, June and July 2022

Table 4 above shows the average house price and percentage change (over the last month and year) by Local Authority Area for July 2021, as well as for June and July 2022, calculated on a seasonal- and mix-adjusted basis. The ranking in Table 4 is based on the local authority area’s average house price for July 2022. Local Authority areas shaded in blue experienced record average house prices in July 2022.

Annual change

The average house price in Scotland increased by some £18,600 – or 9.1% – over the last twelve months, to the end of July. This is a near £2,800 decrease over the £21,400 growth in prices seen in the twelve months to the end of June 2022 – but we were advising last month that prices in June 2021, i.e., one year earlier, had fallen by £3,000 from May 2021, so the base point for measuring annual changes in value was starting from a low level.

In July 2022, 31 of the 32 local authority areas in Scotland saw their average prices rise over the levels seen twelve months earlier – the sole exception being Inverclyde, where prices fell by -1.0. Inverclyde currently has the lowest average property value of the 32 local authority areas in Scotland, despite it having experienced a 7.4% increase in average prices in the month – discussed in more detail below.

The area with the highest annual increase in average house prices in July 2022 was Argyll and Bute, where values have risen by 18.1% over the year. This is the fourth month in succession that Argyll and Bute has recorded the highest annual change in prices, having been assisted in this process by a number of high-value sales achieving prices above their guide levels.

This occurred again in July, with the sale of a four-bedroom shipping magnate’s villa overlooking the Clyde, having an asking price of £650,000 but selling for £850,000. This is a classic example of how homes in attractive locations – this time in Helensburgh – can attract competitive bids, resulting in a significantly higher price for the property under offer.

In Table 4, it is noticeable that the top eight local authorities by value have all seen their average prices increase in the month, suggesting that the desire to move to larger properties in these areas has continued in Scotland over the summer months, despite the school holidays.

On a weight-adjusted basis, which employs both the change in prices and the number of transactions involved, there are five local authority areas in July that accounted for 44% of the £18,600 increase in Scotland’s average house price over the year. The five areas in descending order of influence are: – Edinburgh (13%), Glasgow (12%); South Lanarkshire (9%); Perth and Kinross (5%) and Highland (5%).

Monthly change

In July 2022, Scotland’s average house price in the month rose by some £1,730, or 0.8%, continuing the pattern of minor upward oscillations in property values on a monthly basis. The average price in Scotland now stands at £224,035, which sets a record level for the nation for the thirteenth month in succession.

In July 2022, 20 of the 32 Local Authority areas in Scotland experienced rising prices in the month, two more than in June. The largest increase in average prices in July, of 9.0%, was seen in Na h-Eileanan Siar, but we frequently make the point that the Islands have few sales in a month – in July there were just 12 in the Western Isles – which tends to result in large movements in average prices.

On the mainland, the highest increase in prices was in Inverclyde, up 7.4% in the month. Average prices in Inverclyde were assisted in the month by the purchase of an upmarket flat, in Greenock, being a lower conversion of a traditional 1870 Victorian blonde sandstone property, with 5 bedrooms, which sold for £370k – the second highest priced flat sold in Inverclyde in the calendar year.

At the other end of the scale the lowest increase in average prices in July, on the mainland, was Dundee City, at -3.7%. A number of new homes had been purchased in the Broughty Ferry area of Dundee earlier in the year – but the number sold diminished in July, resulting in the fall in average prices in the area.

Peak Prices

Each month, in Table 4 above, we highlight in light blue the local authority areas which have reached a new record in their average house prices. In July, there are 11 such authorities, two less than in June. We can also add that Scotland itself has set a record average price in July 2022 – the seventh of this calendar year.

Heat Map

The heat map below shows the rate of house price growth for the 12 months ending July 2022. As reported above, 31 of the 32 local authority areas in Scotland have seen a rise in their average property values over the last year, the one exception being Inverclyde. The highest increase over the twelve months to July 2022 was in Argyll and Bute at 18.1%. 16 of the 32 local authority areas had price growth in excess of 10.0% – three less than in June 2022.

Comparisons with Scotland

Figure 3. Scotland house prices, compared with England and Wales, Wales, North East and North West for the period January 2005-July 2022

Figure 4. A comparison of the annual change in house prices in Scotland, England and Wales, Wales, North East and North West for the period January 2005–July 2022

Scotland’s Eight Cities

Figure 5. Average house prices for Scotland’s eight cities from May 2021–July 2022

Figure 6. Average house prices for Scotland’s eight cities July 2022

Accelerating rents push renters towards smaller properties and lower running costs

  • There’s been a jump in demand for one and 2-bed flats as renters feel the cost-of-living squeeze, and fewer renters looking for 2- and 3-bed houses
  • The average rent has increased by £115 per month since last year, reaching £1,051 per calendar month – and accounting for 34.4% of the average income of a single earner
  • Rental growth has accelerated over the last 12 months – from less than 2% in July 2021 to 12.3% today – although there are signs that rental growth is starting to peak at current levels
  • In a reversal of a trend seen during the pandemic, rental growth in urban markets (10.5%) is now outpacing that in rural markets (8.5%) as strong employment growth drives demand in cities
  • There is no real prospect of significantly improved rental supply in the near term as private landlords continue to sell off homes due to tax and regulatory changes and renters decide to stay in their current homes

Renters are being pushed towards smaller properties and lower running costs in the face of higher rents and rising living costs including rising energy prices, according to to Zoopla, the UK’s leading property destination, in its quarterly Rental Market Report. 

Chronic shortage of supply pushes rents higher 

The average rent has increased by £115 per month since last year, reaching £1,051 per calendar month – and accounting for 34.4% of the average income of a single earner. This surge in rents is heavily impacted by a severe supply and demand imbalance with the stock of homes available to rent standing at just half of the five-year average – while the average letting agent currently has just eight homes available to rent.*

This chronic supply shortage is also impacted by an increase in renters staying put in their properties to avoid rent hikes and landlords continuing to sell properties in the face of tax and regulatory changes. Currently, approximately 3 in 4 renters will decide to stay in their current property and although they will experience lower levels of rental growth of 4% or less – this will squeeze supply in the market as a result. 

There’s been an acceleration in demand for one and 2-bed flats as renters feel the cost-of-living squeeze, and fewer renters looking for two and 3-bed houses. Outside of London, the average asking rent is £105 lower per month for a 2-bed flat compared to a 3-bed house. 

Renters making decisions about what type of property to rent will also consider running costs and rising energy prices are likely to be playing a role in the shift in demand to smaller homes. 

When it comes to energy prices, the amount of gas to heat and run a purpose-built flat for a year is 40% lower than a terraced house and 25% lower for a converted flat.** New-build city centre flats are also becoming increasingly appealing to renters seeking out smaller homes with lower running costs.

Annual rental growth nears its peak

Rental growth has accelerated over the last 12 months from an annual rate of less than 2% in July 2021 to 12.3% today, while rental growth is out-pacing earnings growth in all regions and countries of the UK.  Rental growth is ranging from 7.6% in the North East to a staggering 18% in London – however, there are signs that rental growth is close to peaking.

Despite rents in London rebounding from a low base,  the pace of rental growth in London is not sustainable at current levels with average rents in London currently 7.8% higher than pre-pandemic.

In a reversal of a trend seen during the pandemic, rental growth in urban markets (10.5%) is now outpacing that in rural markets (8.5%) as strong employment growth drives demand in cities. 

The strongest performing urban markets are London (17.8%). Manchester (15.5%), Glasgow (14.4%) and Bristol (12.9%) – where rental growth is standing above the UK average of 12.3%. Rents are also rising faster at the top end of the market with asking rents for 2-bed flats rising more quickly at the upper end (top 25%) of the market in comparison to the lower end of the market where demand is more price sensitive.

What’s the outlook for the rental market?

There is no real prospect of significantly improved rental supply in the near term as private landlords continue to sell off homes due to tax and regulatory changes. Renters renewing their tenancies will also amplify the fierce supply squeeze and keep upward pressure on rents into 2023.

There is headroom for some renters to pay more, especially outside London and the South East, however overall, we expect the headline rental growth to slowly taper over Q4 and into 2023. 

Richard Donnell, Executive Director at Zoopla comments: “Rents have surged ahead over the last year but there are signs that the pace of growth is peaking and set to slow into 2023. Renters are responding and looking for smaller, better value for money homes to rent with an eye on energy costs as much as rental levels. 

“What the rental market needs to combat these challenges is more new homes for rent. Greater regulation has seen less new investment and a small but growing number of landlords selling up, meaning the rental market has stopped growing since 2016.

“There is a risk that more regulation to improve standards or potential new measures to dampen rental growth, as proposed in Scotland, may compound the supply problem which is pushing rents up in the first place. Policymakers need to tread a careful path between protecting consumers and ensuring a decent supply of homes for rent.”

Hannah Gretton, Lettings Director at LSL’s Your Move and Reeds Rains brands comments: “We are experiencing high levels of demand for rental properties with homes being snapped up within hours of hitting the market.

“With over 270 lettings branches nationwide, it’s a picture that is reflected up and down the country with particular demand in urban areas.

“On average, we are seeing double figures of enquiries per property with a one-bedroom property in Manchester last week receiving over 100 requests to view, highlighting just how busy our branches are and the challenges renters face when it comes to finding an appropriate property.”

Scottish Housing Day: Alliance of Edinburgh affordable housing providers rally together to support sustainable housing

With Scottish Housing Day (14 September 2022) focusing on sustainable housing, the Alliance of Registered Co-operatives and Housing Associations, Independent in Edinburgh (ARCHIE) is working collaboratively to address the challenges around decarbonisation and energy efficiency and provide advice on how tenants can live sustainable lives, from energy saving tips to financial support.

Past ARCHIE successes include joint ventures such as distributing energy saving packs to tenants and energy use advice. One of the most successful projects is the provision of Tenant Advice Services, which includes money, debt, benefits and tenancy sustainment advice.

Through sharing services and collaborating on joint activities ARCHIE members provide value for money and keep rents affordable.

The ARCHIE members are Lister Housing Co-operative, Manor Estates Housing Association, Muirhouse Housing Association, Port of Leith Housing Association (PoLHA), Prospect Community Housing, Viewpoint Housing Association and West Granton Housing Co-operative.

Larke Adger, Chair of ARCHIE and Chief Executive, West Granton Housing Co-op commented: “Through collaborative working, we have achieved better services and support for tenants across all ARCHIE member organisations.

“We look forward to continuing to build on this work to help create thriving, sustainable communities.”

Housing market experts advise: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed

How the new interest rates affect house prices and rent

  • Housing market: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed, finance experts advise
  • Landlords will likely increase rent prices or sell to cope with increased mortgage repayments
  • Inflation and interest rates will keep rising, but house prices are already slowing down

The Office for National Statistics announced last month that UK inflation rose to 10.1%, from 9.4% two months earlier. The Bank of England expects it to further increase, peaking at 13.3% in October. The accompanying higher interest rates, currently at 1.75%, and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.

Top market analysts at CMC Markets expect interest rates to further rise to 2.25% in September. This directly impacts mortgages on variable rates – around 1 in 5 households in the UK – and another 3.1 million whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.

Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3% and 4%, up from 1.75% and 2.75% only five months earlier. This will inevitably spill into rent prices.

CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17th, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.

Michael Hewson, Chief Market Analyst at CMC Markets comments: “Houses sold in June 2022 only increased in price by 1% compared to May, whereas, last year, this constituted a much more generous 5.7% surge.

“This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised. Remember, house prices may be slowing down, but they are not decreasing. Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.

“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt. Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price.

“Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”

What did the Bank of England do earlier in August?

The Bank of England explained that the rise in interest rates was necessary due to external pressures which are expected to persist. This means that British firms and residents will continue to feel this weight reflected on rising domestic prices, wages outpaced by soaring inflation, and even higher mortgage repayments, despite the Bank’s attempt to widen the borrowing pool through less restrictive mortgage rules.

Although historic, the Bank’s decision was not a surprise for trading analysts at CMC Markets, a London-headquartered financial services company, who believe the Bank was expected to raise interest rates higher than 1.25% during the June meeting, as a means to keep import inflation in check.

This is on the backdrop of a 10% year-to-date depreciation of the British pound sterling against the US dollar and an indication from the Federal Reserve, the US central bank, of a further interest rate increase by 0.5% or 0.75% in September.

Michael Hewson comments: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”

What’s next and when will things calm down?

Other than adjusting the interest rates to the accurate level to keep abreast of import inflation, the economic projections for the UK paint a bleak outlook for the next two years.

The UK is projected to enter a recession in the final quarter of this year, the Bank of England announced. The country’s economy will contract by 1.25% in 2023 and 0.25% in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2% much before 2024.

The current political race for the Conservative Party leadership and the consequent fiscal policies promoted by the new British government is a major factor to take into account for any inflation, GDP, and unemployment projections and investment decisions.

As it stands with the current measures, inflation is expected to peak at 13.3% in October – a sharper increase than the Bank anticipated in June, originally estimated at 11%. It will continue to rise throughout 2023 only to decline in 2024.

Meanwhile, forecasts for the Consumer Price Index (CPI) are less optimistic now, expected to decrease only to 9.5% in the third quarter of 2023, although the Bank anticipates a sharp fall in prices immediately thereafter.

Selling prices are set to increase to reflect rising costs while real household post-tax income is expected to plunge in 2022 and 2023. The Bank predicted that core prices will peak at 6.5% this year, meaning that, in the following six months, food and energy will constitute more than half of the headline CPI.

The next meeting for the Monetary Policy Committee, where the Bank of England will decide what the new base interest rates might be, is set for September 15th.

Lorna Slater MSP welcomes rent controls and eviction ban to help people in Lothian 

Lorna Slater, the Scottish Greens MSP for Lothian has welcomed the Scottish Government’s announcement of a national rent freeze and an eviction ban until at least March, which they say will provide “vital stability and support” for tenants across Lothian at a time when many are suffering.

The announcement was made as part of the Programme for Government and will help tenants across Lothian where the average monthly rent is £942, which is an increase of 41.7% since 2010.

Scottish Green MSP for Lothian, Lorna Slater said: “With soaring inflation and skyrocketing bills, these are desperate times for tenants all across Scotland. People in Lothian have been hit by increasing rents.

“We are facing the biggest social emergency for decades. The rent freeze and eviction ban that the First Minister announced will provide vital stability and support for tenants across Lothian and beyond at a time when many are suffering. 

“It is one of the steps we are taking, in partnership with the Scottish Government, to mitigate the damage being done by Downing Street and the energy companies.”

“Improving tenants’ rights and tackling inequality are at the heart of the cooperation agreement that we agreed with the Scottish Government and must be at the heart of our recovery.”

“Over the course of this parliamentary term Scotland will see the biggest expansion of tenants’ rights since devolution, with more rights for tenants to make a house a home by keeping pets and decorating, better protections from eviction and, perhaps most importantly, a robust system of rent controls.”

 

Majority of professional landlords with large portfolios have no succession plan in place

Handelsbanken Wealth and Asset Management urges professional landlords to plan for the future

Most professional landlords with large portfolios (52%) have no succession plan in place, risking the future sustainability of their business for the next generation.

The findings, from local relationship bank Handelsbanken, also suggest a worrying lack of succession planning among older landlords, with half of those aged 45 or above lacking any long-term management plans.

According to Handelsbanken’s SME Landlord Survey Report 2022, which surveyed 120 professional landlords with at least four properties, more than a quarter (27%) of those with no succession plan said they had not had the chance to develop one yet, while 23% admitted it had simply not crossed their minds.

Around one in five (19%) said that they had no one to leave their portfolio to, while 15% stated it is simply not a priority for them – with the same proportion saying the process was just too complicated.

The study shows that landlords with smaller portfolios are far more likely to have taken steps to protect their portfolio from estate tax liabilities: an overwhelming majority (96%) of landlords across all age groups with a portfolio of four or five properties say they have long-term succession plans in place, compared to just 52% with more than 10 properties, suggesting that those with higher value estates are less concerned about the tax liability facing the next generation.

Among all those with a clear succession plan in place, more than half (54%) plan to convert their portfolio into a property development portfolio to attract business property relief, while 43% are considering a charitable trust, which would enable the handover of business to their heirs with minimal tax exposure.

Other popular options include family trusts (35%), family investment companies (28%) and acquiring agricultural properties to qualify for agricultural relief (26%).

Plans and solutions for succession planningPercentage of respondents
Converting portfolio to a property development portfolio to attract BPR54%
Charitable trusts43%
Family trusts35%
Family Investment Company28%
Acquiring agricultural properties for Agricultural Relief26%

Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth and Asset Management, a subsidiary of Handelsbanken, said: “The success of buy-to-let over the past decade has created huge numbers of wealthy landlords – with a real need for dedicated financial and tax planning.

“Property investors with substantial portfolios often defer creating a wealth succession plan, but are prompted into action when considering the alternative – the need for their heirs to sell assets to meet the tax liability on death.

“A plan that includes the use of a family investment company or a trust may carry some initial tax cost, but if put in place early enough, has the potential to create far greater savings over the longer term.”

To read the full Handelsbanken’s SME Landlord Survey Report 2022, please click here.

Council lied to justify destructive development, claim Silverlea campaigners

Community campaigners fighting to save the Silverlea woodland, wildlife and heritage site from a housing development have condemned as “Council lies” the claim that the site is a “barren” flytipping site  of “low landscape value and low recreational value with few quality trees”.

A meeting of the City of Edinburgh Council development sub-committee on 10 August flouted the Council’s own policy by approving the building of 142 houses on the green belt in the Muirhouse and the Salvesens area in north-west Edinburgh.

The Save Our Silverlea Campaign describe a photo of the site produced by the Council to justify the development as “totally misleading”.  

A SoS spokesperson said: “The photo showed a big pile of flytipped waste – but when a team from Save Our Silverlea visited the site days after the Council meeting, all we found was one white plastic bag and a dumped shopping trolley. The Council photo was either very old or taken elsewhere.  Councillors visited the site shortly before the meeting so they should have known the photo was ‘fake news’.”

Save Our Silverlea have produced photos of the site showing massive trees and a verdant and vibrant woodland. 

30-40 mature trees are to be felled to make way for the proposed scheme.

“We defy anyone – even a Councillor – to look at these magnificent trees and say this is a “barren”  flytipping site.  Clearly there has been some flytipping over the years – but if the site was sympathetically opened up to the community as a mini nature reserve with low impact paths and perhaps a children’s play area, then this increased footfall would act as a deterrent to flytipping. 

“The Council is effectively “saving” the site by destroying it.”

Freedom of Information request

The camapigners say the city council tried to justify the destruction of dozens of mature trees by claiming they were planting 131 saplings on the narrow strip of grass known as Silverknows Park. 

At the Council meeting Save Our Silverlea spokesperson Edward Murray described the real situation: “My flat overlooks Silverknowes Park and I watched them planting these saplings out in mid-February on a bitter cold day with the ground waterlogged,” he explained.

“The end result is the vast majority of these saplings never took root. They’re dead. Are we then to exchange 30-40 mature trees for row upon row of dead twigs in plastic tubes? That doesn’t strike us as a fair exchange.” 

On 16 August Save Our Silverlea submitted a Freedom of Information request asking how much the Silverknowes Park Tree Plantation cost.

At the Council meeting Edward Murray described Muirhouse, where he has lived for over 30 years, as “just a dormitory for workers to sleep in before going back to work again”. 

Mr Murray added: “Muirhouse is the size of a small town; it has no primary school, no park, not even a pub. It doesn’t even have a supermarket. In short, it is a deprived area. We have nothing down there. It’s one of the most deprived areas in Edinburgh.  

“And now, having taken practically everything, you want to take our last green space, the Silverlea site, for development, destroying a wildlife habitat and creating congestion and pollution along the Silverknowes/Muirhouse Parkway, described by Police Scotland as ‘the second most dangerous road in Edinburgh’.”

Save our Silverlea are continuing their campaign:  “As climate change threatens the future of humanity, we need to act to defend our green spaces.   This land should be used for the local community – not to make £millions for greedy property developers.

“We need much more council/ social housing – build council houses on the brownfield sites where they are now building 1000s of private houses.   The struggle to save our Silverlea continues.”

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