Commentary on February / March Property Investor´s Factfile

February / March 2017 Property Investor´s Factfile

The Property Investor Blog´s monthly factfile presents broad range of data including national / London house prices, the latest buy to let Limited Company (SPV) loan rates, LIBOR / SWAP rates, rental data, mortgage debt figures and information on the first-time buyer sector. Using data from a range of sources (referenced on the last page of the factfile), we have outlined some relevant observations below:

Between December and January, Halifax and Nationwide reported dips in estimated national house prices at 1.0% and 0.32% respectively. However, during the same period, LSL / Acadata stated an average price increase of 0.84%. Land Registry data indicated that between November and December 2016*, prices rose by 0.74%. Rightmove asking price index pointed to a 1.99% increase between January and February 2017 (although investors should be aware of the often noticeable differences between marketed and actual sold prices);
Although widely estimated to plateau during the course of 2017, between November and December Land Registry prices rose across London with the highest growth seen in the City of Westminster (2.90%) – contrary to what many commentators have predicted would be continued post-referendum drops. However, particularly in the more affluent areas of the Capital, data may be slightly skewed due to lower sales volumes. Inner** and Outer London*** saw marginal price increases of 0.50% and 0.51% respectively. It will be interesting to watch the London market in the coming months in light of uncertainties surrounding the Brexit negotiation process, the implementation of Section 24 of the Finance Act and a general difficulty of finding feasible refurbishment / development projects across the Capital (largely owed to unrealistic sales value expectations);
Interesting data via the BBC´s analysis of official figures from the Department for Communities and Local Government (DCLG) found that 76,559 homes outside of London were purchased using Help to Buy Loans between April 2013 and April 2016 (30% of the 255,960 privately built new properties completed in that period). In London specifically, 4,483 properties were completed using equity loans which is the equivalent to 11% of the 41,480 privately built homes over the same time. Less than than one in every 500 London homes has used Help to Buy, compared with one in every 200 elsewhere in England – somewhat quashing debate of the equity loan being “next sub-prime”. However, the data pointed to surge in uptake in Greater London since February 2016, when the government increased the upper limit for new home-buyers in the Capital from 20% to 40% of the property’s value;
According to Council of Mortgage Lender (CML) data, in the fourth quarter of 2016: home buyers borrowed £5.9 billion for purchases, down 5% quarter-on-quarter and 13% year-on-year; first-time buyers borrowed £3 billion, down 3% on the third quarter and 4% on the fourth quarter last year; home movers borrowed £2.8 billion, down 8% quarter-on-quarter and 21% compared to the previous year and remortgage activity totalled £3.9 billion, down 13% on the third quarter but unchanged compared to the same quarter last year;
In London: home buyers borrowed £24.5 billion for purchase, down 0.4% on 2015; first-time buyers borrowed £11.9bn, up 3% on the previous year; home movers borrowed £12.5 billion, totalling 32,400 loans, down 3% by value and remortgage activity totalled £16.5bn, up 21% on 2015;
UK LIBOR and SWAP rates steadily remain at historically low levels;
As more investors become aware of the downsides of owning / purchasing leveraged personally owned buy to let property, the level of Limited Company acquisitions is set for continued growth with fixed rates on 2 year LIBOR-linked / fixed terms at 75% loan to value (LTV) ranging from 3.29% to 3.64% as well as a 80% LTV Limited Company product on a 1 year term with a 3.99% pay rate (arrangement fees are typically £1,500). Specific rules apply – for more information and to discuss you specific borrowing circumstances please get in touch with paul.lowcock@bespokefinance.info or direct on 01133 203240;
Rents in England have continued to grow strongly; Welsh rental figures have been broadly flat since 2012, as has Scotland´s since late 2015 (after a relatively strong growth period in the preceding years).

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* Most Land Registry property data has a 3 month time lag (with the delay owed to formal registration of sale). Readers may be interested in reading an interesting recent article on this topic by Neal Hudson (@resi_analyst) entitled the “The Land Reg Lag”.

** The Land Registry classifies Inner London as constituting the following boroughs: Camden, City of London, Hackney, Hammersmith & Fulham, Haringey, Islington, Kensington and Chelsea, Lambeth, Lewisham, Newham, Southwark, Tower Hamlets, Wandsworth and Westminster;

*** Barking & Dagenham, Barnet, Bexley, Brent, Bromley, Croydon, Ealing, Enfield, Greenwich, Harrow, Havering, Hillingdon, Hounslow, Kingston upon Thames, Merton, Redbridge, Richmond on Thames, Sutton and Waltham Forest.

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