In light of the LEAVE decision from the EU referendum there may be effects on the UK property market.
The headlines:
The immediate impact has been market uncertainty, the FTSE has dropped approx. 10% since the decision was announced and major house builders like Taylor Wimpey, Permission, Barratts, and Berkley Homes have all lost between a third and half their value.
Further the sterling has dropped against the dollar from 1.50 to 1.30 and that is still falling.
Interest Rates
The EuroZone base rate is already negative and some experts are expecting the Bank of England to drop the UK base rate to zero to boost the economy and this may be further pushed in order to keep inflation low in the light of the currency falls which will impact the cost of imports.
The Bank of England will want to encourage investment in the economy therefore rates will remain low.
Supply
There has been an increase in construction activity over the past 24 months, buoyed by relaxation of some planning laws and extension of permitted development rights.
Although the market impact on large house builders, they will still want to complete projects, even if new project starts are delayed.
Demand
There are many factors that influence demand and attractiveness for housing in the UK that are not EU related, such as depth of skills, education, lifestyle and language. Further to this, supply is always below demand with an increase in the number of households and smaller family units. The affordable end of the market will continue to have the highest demand.
High end property, in particular may see an increase in demand as Dollar based Middle east and Asian investors will now consider the short term buying opportunities within the property market and look to acquire residential property priced above £1million. The currency correction more than compensates for the changes in stamp duty which had previously discouraged high value property transactions.
House Prices
House prices will depend on regional factors and differences. Some regions may see a correction some may stagnate; however it is too early to speculate specifics.
Rental Market
Rental market is linked to employment as well as affordability and ability of renters to become home owners. The rental market especially in London and the South East is also heavily influenced by migrant workers and students, depending on how working rights and students will be impacted will determine long term effects.
Lending
The measures in the budget in April already discourage buy to let purchases, therefore banks currently have more than the usual surplus to lend, this is reflective in the record low rates on the market.
Lenders may tighten criteria especially on rental expectation but overall lending should not be adversely effected in the short run.
Investment
Investment especially in buy to let has slowed since the introduction of measures in the budget, however with lower interest rates expected, as well as the drop in sterling, investing in the UK is now cheaper, together with the low savings rates in banks, property investment is by far the better investment.
Conclusion
Overall Article 50 will only be exercised after a new leader is elected and then after 24 months will Britain actually leave, therefore uncertainty may remain till then end of 2018, however not much else will change.
The UK Property market will remain resilient and still a strong place to invest.
Peer to Peer Lending on Property
/0 Comments/in Featured /by NiravPeer to Peer (P2P Lending on property projects are an increasingly important and emerging source of funding for new SME developers.
Platforms such as PropertyMoose.co.uk, PropertyPartner.co, TheHouseCrowd.com, Propio.com, CrowdProperty.com, AssetzCapital.co.uk, PropLend.com and FutureBricks.com are connecting developers with crowd lenders in the UK.
PropVestment is undertaking research to better understand the preferences of the lenders when it comes top choosing which projects to lend to.
Please undertake the survey below, it should only take 10 minutes and we will publish the results on the website soon.
Case Study: Can’t get development finance
/0 Comments/in Featured, Finance /by NiravWe were approached recently by a landowner who had obtained planning permission on a parcel of her land, adjoining a business premises.
She had no development experience, and required help to raise the development finance and project manage the development.
Attempt 1
We approached the “usual” development lenders but were unsuccessful.
They were unwilling to lend to someone with no experience, and on a “small” £300k building contract.
Attempt 2
Then we secured lending based on PropVestments’ track record from one lender, to undertake the project as a joint venture. However this was the week leading to BREXIT, and so at the last minute even this lender pulled the plug.
Attempt 3
Another development lender, however their rates were comparable to bridge lending and to make matters worse, their lead time was 6-8 weeks for credit approval.
Solution: Non traditional Development Finance
Finally PropVestment arranged finance with a private bridge funder, with favourable rates and monies disbursed within a few days. To make matters even better, the bridge was structured like development finance with monitoring surveyor sign off in stages. This means the landowner does not have to pay the interest on the full amount like many other bridge loans.
The build process is well underway, a happy land owner, and solution provided in a tricky situation.
Development can be undertaken by anyone, with the right guidance and partners you can make a success of it. Do not be intimidated by rigid lenders and red tape.
PropVestment can help project manage, secure development finance and recommend contractors and property professionals.
We have experience and the professional network that can ease the stresses of property development and allow you to realise the returns hidden in your property.
#Brexit Impact on UK Property Market
/0 Comments/in Featured, House Prices, Interest Rates, London Property, Mortgages, Property Investment /by NiravIn light of the LEAVE decision from the EU referendum there may be effects on the UK property market.
The headlines:
The immediate impact has been market uncertainty, the FTSE has dropped approx. 10% since the decision was announced and major house builders like Taylor Wimpey, Permission, Barratts, and Berkley Homes have all lost between a third and half their value.
Further the sterling has dropped against the dollar from 1.50 to 1.30 and that is still falling.
Interest Rates
The EuroZone base rate is already negative and some experts are expecting the Bank of England to drop the UK base rate to zero to boost the economy and this may be further pushed in order to keep inflation low in the light of the currency falls which will impact the cost of imports.
The Bank of England will want to encourage investment in the economy therefore rates will remain low.
Supply
There has been an increase in construction activity over the past 24 months, buoyed by relaxation of some planning laws and extension of permitted development rights.
Although the market impact on large house builders, they will still want to complete projects, even if new project starts are delayed.
Demand
There are many factors that influence demand and attractiveness for housing in the UK that are not EU related, such as depth of skills, education, lifestyle and language. Further to this, supply is always below demand with an increase in the number of households and smaller family units. The affordable end of the market will continue to have the highest demand.
High end property, in particular may see an increase in demand as Dollar based Middle east and Asian investors will now consider the short term buying opportunities within the property market and look to acquire residential property priced above £1million. The currency correction more than compensates for the changes in stamp duty which had previously discouraged high value property transactions.
House Prices
House prices will depend on regional factors and differences. Some regions may see a correction some may stagnate; however it is too early to speculate specifics.
Rental Market
Rental market is linked to employment as well as affordability and ability of renters to become home owners. The rental market especially in London and the South East is also heavily influenced by migrant workers and students, depending on how working rights and students will be impacted will determine long term effects.
Lending
The measures in the budget in April already discourage buy to let purchases, therefore banks currently have more than the usual surplus to lend, this is reflective in the record low rates on the market.
Lenders may tighten criteria especially on rental expectation but overall lending should not be adversely effected in the short run.
Investment
Investment especially in buy to let has slowed since the introduction of measures in the budget, however with lower interest rates expected, as well as the drop in sterling, investing in the UK is now cheaper, together with the low savings rates in banks, property investment is by far the better investment.
Conclusion
Overall Article 50 will only be exercised after a new leader is elected and then after 24 months will Britain actually leave, therefore uncertainty may remain till then end of 2018, however not much else will change.
The UK Property market will remain resilient and still a strong place to invest.
How the Budget 2016 affects property investors
/0 Comments/in landlords, London Property, Property, Property Investment, Real Estate, Tax /by NiravWith the Stamp Duty surcharge coming into effect today, we look back at the key points from the Budget 2016 affecting the UK property market.
0% rate on purchases up to £150,000,
2% on next £100,000 and
5% top rate above £250,000.
New 2% rate for high-value leases with net present value above £5m
Other issues to consider from previous budgets
Under current rules, taxable profits are reduced by interest on money borrowed for the purposes of the letting business. Phased in over a four year period starting with the 2017/18 tax year, UK taxpayers will no longer be able to deduct interest in calculating taxable rental profits. Instead, landlords will obtain a reduction in tax equal to basic rate tax on any interest borrowed.
The changes will be introduced gradually, so that the amount of interest which is deducted from rental profits is 75% from 6 April 2017, 50% from 6 April 2018, 25% from 6 April 2019 and 100% from 2020/21.
On the same dates, a reduction in tax will be given for the interest which has been disallowed. The tax reducer is the basic rate tax (currently 20%) multiplied by the disallowed interest. In practice the tax reducer will be 20% of 25% of interest for 2017/18, 20% of 50% of interest for 2018/19, 20% of 75% of interest for 2019/20 and 20% of the whole interest from 2020/21.
By 2020/21, a landlord who is a higher rate taxpayer will effectively only receive basic rate tax relief on mortgage interest payments.
Conclusion
Overall the positives for the Budget 2016 are a few; higher income tax thresholds and allowances and lower corporation tax.
The negatives are greater with the surcharges on Stamp Duty, higher insurance, and removal of interest relief.
The impact of new investors is much higher with the increases upfront Stamp Duty expense, and for those who are heavily mortgaged on their buy to let investments.
However it will take some time to effect rents and house prices, these may balance some of the additional costs for buy to let and property investors.
With interest rates still so low, property investment still out weighs leaving your money in the bank.
Sources:
LRS Forum
Coman & Co
Stamp Duty rise won’t kill property investment
/0 Comments/in Featured, Interest Rates, London Property, Property, Property Investment, Real Estate, Tax, Uncategorized /by NiravOn the 1st of April 2016, the “Landlord Tax” or stamp duty surcharge comes into affect of a 3% surcharge for anyone buying a second home or an investment or buy to let property.
However what will be the impact for the property investor? Will it reduce prices or first time buyers? Will the extra cost be passed on to renters? Will the UK property market crash?
Today the ONS released statistics that property prices are rising 6.7% year on year in 2015, and that is 9.4% in the UK. So in effect and extra 3% is the same as if you delay the purchase of your property in London by 4 months, or alternatively you will cover the cost by the increase in prices within 4 months.
In this case an investor may try to pass on the additional cost to the renter. This will be a completely possible strategy and the property market will allow it. However will this make up the difference. For example a residential property yielding 6%, there for a 3% stamp duty surcharge would mean 6 months rent. If the Landlord increases rents by say 10% then it will take 5 years to recover the surcharge.
But, and its a big but, with the FTSE being volatile and the interest rates not likely to rise anywhere near enough to compete with property, an investors best place to invest is still property.
In conclusion the stamp duty surcharge will not really put investors off, it will just increase rents and increase the tax revenue.
Do you want to avoid the stamp duty surcharge?
Look into other options for property investment. Contact us we have a number of opportunities where you can invest in property development deals, with profit shares or fixed incomes. Contact info@propvestment.com
Sources:
BBC Article
Office to Residential Conversion made permanent
/0 Comments/in Featured, London Property, Professional Services, Property, Property Investment, Real Estate, Uncategorized /by NiravThe Prime Minister announced today that the Permitted Development Rights that enabled office to residential conversion without full planning permission is set to be made permanent. The scheme with initially ran from 2013 to May 2016 will be extended indefinitely.
This is great news for potential buyers of homes as well as property developers and all professionals connected to the industry. It will mean an flood of new development sites to the market and an increase in available housing stock. This should start to be realised within 12 to 18 months, the usual length of time required to convert a building.
Office blocks are usually in inner city location or near transport links making them ideal locations for residential units. Perfect for young buyers who rely on these links. Furthermore converted building are typically cheaper than new builds and many often come with a character that new builds just do not.
We at PropVestment are actively looking for office sites to convert into residential units, please email nirav@propvestment.com.
CDM Regulations 2015
/0 Comments/in Featured, Uncategorized /by NiravFrom 6th April 2015, the Construction (Design and Management) Regulations 2007 were replaced by the Construction (Design and Management) Regulations 2015 (the “Regulations”).
The Regulations are intended to be less bureaucratic than the previous regulations and to improve the planning and management of projects from the start.
CDM changes
The Regulations brought about key changes, which include:
CDM 2015 creates a new duty holder, the Principal Designer (PD)
In many cases this will be the architect who on the majority of projects is appointed first by the client but not always. The HSE think that some designers will not want to take on the functions of the PD and many would not be capable of doing so for all but the smallest of projects.
The PD must be a designer as defined in the Regulations, i.e., anyone who as part of their business (a) prepares or modifies a design; or (b) arranges for, or instructs any person under their control to do so.
A “design” is widely defined to include specifications, bills of quantities and calculations prepared for the purposes of a design.
The HSE consider that “Chartered Surveyors and Technicians” are also “designers” under CDM 2015. Equally, anyone who selects a product for use or develops a detailed design which is then manufactured for a project is also treated as a designer according to the guidance.
A six-month transitional period is in place from 6 April – 6 October 2015.
What does this mean for current construction projects during this transitional period?
In this period, special provisions will apply before the Regulations take full effect across the board. Such provisions apply during the transitional period as follows:
Make sure you are CDM 2015 compliant. These regulation changes effect the smallest projects to the largest. At PropVestment we can advise and recommend professionals who can ensure you are compliant and can take on the Principal Designer role for you.
Stamp Duty changes: #AS2014
/0 Comments/in Finance, First Time Buyer, Property, Real Estate, Tax /by Nirav#SDLT (Stamp Duty Land Tax) has been totally reformed in the Autumn Statement by George Osbourne. First time buyers gain, and buyers of property over £937,500 lose out.
98% of people who will be paying Stamp Duty will pay less
Under the new rules Stamp Duty will follow a scale similar to income tax, with thresholds where the rate is due proportionally.
What is the impact on First Time Buyers or regular home owners?
First time buyers will benefit. Under the new rules first time buyers will pay on average £400 less. The average price paid for a first home is £210,000. Under the old system the rate was 1% on the whole amount therefore £2,100. However under the new system only amount above £125,00 so ££85,000 is taxed at 2% totaling £1,700.
What is the impact on Property Developers?
For property developers the new is not so good. With so many sites coming in over the £1m mark, property developers will be hit hard. In Particular those in London and the South East where even the smallest sites come in over the £937,500 threshold from which point the effective rate is higher under the new system.
The critics are calling this move George Osbourne’s own engineering of the Mansion Tax. However this will definitely help smaller, less affluent families and most of all first time buyers. The upper end rates are really quite high and will impact small developers more, who operate on a smaller scale and rarely get other subsidies like the larger ones.
It must be noted that these rates and changes do not affect commercial property, therefore many developments may not be harmed that much.
Will this reduce or increase the net proceeds to the treasury?
In conclusion, this is a positive move by the Chancellor, it just waits to be seen how this translates for first time buyers and conversely with property developers in reality.
Is the London property market slowing?
/0 Comments/in Auctions, First Time Buyer, London Property, Property, Property Investment, Real Estate /by NiravPropVestment attended the auction on the instruction of client’s interested in some of the lots on offer. Here is how it went:
Key observations:
London property analysis
Developers were hungry for prime development lots in good locations, where there is confidence that final products will sell and where there is potential to achieve higher values. However locations away from prime residence or commercial zones did not fair so well. Some lots were offered by London Borough of Camden, the ones on normal residential streets sold well, but ones in proximity to estates and tower blocks did not. Council are cashing in.
Flats sold well, these are properties that are more affordable and hence there is greater demand.
Luxury houses suffered, where sellers are anticipating very high prices. The irony is that with the Stamp Duty announcement in the Autumn Statment these properties will be less desirable and therefore sellers will not achieve the prices they want.
Another factor that may contribute to slower sales is the up coming holiday season, with many auction lots requiring 4 week completions it is not desirable or possible to complete. Auction purchases require greater legal scrutiny and finance is still difficult.
For advise, appraisals or general consultancy on London property feel free to get in touch: info@PropVestment.com

Note: PropVestment only attended the first 30 lots on offer, data is from first hand observation, although we aim to provide accurate information this information is not verified with McHugh and Co.Hidden costs of buying a property
/0 Comments/in Finance, First Time Buyer, Mortgages, Property, Tax /by NiravCost of buying a property go well beyond the deposit required
Many new buyers often make the miscalculation that the money they have saved up, is the amount they should budget for buying a property or putting down a deposit. There are many other costs that arise that new buyers should be aware of. Here are just a few examples.
Legal costs of buying a property
Legals fees are a must, remember you get what you pay for. Use a reputed conveyancing firm. Depending on the complexity of your deal typical costs could vary from £500 to £1000. In some cases you can get the lender to contribute to some of these costs, however beware that they do not cover this by charging else where.
Stamp Duty costs of buying a property
Considering very few property purchases are below the £125,000 threshold most people will have to pay stamp duty. This is a tax an is payable on completion, therefore must be budgeted into your calculations.
(percentage of the total purchase price)
Source: https://www.gov.uk/stamp-duty-land-tax-rates
Check out this easy stamp duty calculator.
Survey costs of buying a property
Surveys can typically cost £400 to £800. This must be paid regardless if the purchase goes through, so do your own research before instructing a survey. Make sure the value stands up and the purchase is not too risky for the lender. Sometimes the lender covers the cost of the survey or adds it to the mortgage.
Valuation fees when buying a property
Mortgage lenders will charge a valuation fee, that can vary from £300 to £500. They sometimes cover the cost or give you the option to add it to the mortgage amount. Look at the fine print and get clarification.
Mortgage arrangement fees
Lenders have become smart and crafty. Often as the interest offered on a mortgage goes down, the arrangement fees go up. In reality this is a pointless fee but they do charge it. It can be over £1000 in some cases.
Moving costs & repairs
Moving costs if you are hiring help can run into over £1000 for a single day. Calculate how much you have to move and plan the move well.
When you view your property before completion check things thoroughly, the last thing you want is a boiler failing, the roof collapsing as soon as you move in.
How can PropVestment help?
We can provide you with a walk through of purchasing a property and put you in touch with our preferred and vetted financial advisers, solicitors, and moving team. Contact us today for a no obligation chat.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net