Property Prices in Europe show UK is the best place to invest

 For years, British investors in property have been among the most likely to be putting their money into foreign markets, where holiday homes and rental accommodation could promise them an income as well as the future capital gains. However, while areas like Spain, France, Italy and Cyprus still remain popular, new European property data has shown that investment in the UK is still often the best method to undertake.

According to the latest statistics from Eurostat, the price of property in the eurozone fell by a total of 1.5 per cent on average in the last quarter of 2013 when compared to the same period a year earlier, which marks a substantially worse performance across the continent than has been seen in the UK in recent times. While property values in Europe have been dropping time and again, especially in Spain and Italy, British homes went up by 5.4 per cent in the year to the end of November, according to the latest figures from the Office for National Statistics.

On the continent, prices were down by 0.6 per cent and 0.7 per cent in the eurozone and the European Union on a quarterly basis. Some of the worst performing nations across the two groups were Croatia, Cyprus and Spain, which witnessed price falls of some 16.9 per cent, eight per cent and 6.4 per cent respectively on an annual basis to the end of quarter three.

This leaves the UK as still one of the best places to invest in property across the whole of Europe. With demand high headed into 2014, and a record number of house hunters prevalent in the market at the end of 2013, it means that those who buy homes can see a great chance to either let them to rental customers, or even sell them on at profit, with prices set to improve by up to eight per cent this year alone, according to the figures released by Rightmove earlier this month.

Written By +James Roberts

Wednesday 29 January 2014

Nottingham City Council to sign off on city centre development upgrades today.

The signing of the agreement is a step towards major improvements to Nottingham’s two main shopping centres.

These include the £40m remodelling and refurbishment at intu Victoria Centre which is already underway, alongside the £150m proposed investment by intu and the city council in the redevelopment of intuBroadmarsh - ahead of a wider development and extension of intu Victoria Centre.

Leader of Nottingham City Council Jon Collins said: “This agreement means that the key component of our plans to reinvigorate the city centre for visitors and shoppers can move forward, with the transformation of intuBroadmarsh.”

Mike Butterworth, chief operating officer for intu, said: “intu now has in place investment plans that will extend and upgrade the city’s two favourite shopping destinations, introduce new brands, restaurants and leisure spaces and create new and improved gateways to the city in the north and south.”

Construction work to extend and refurbish intuBroadmarsh could start before the end of 2015, subject to the commercial and legal conditions of the agreement.

intu has been working with local architects Benoy since early 2012 on potential designs. 

intu plans to carry out the formal public consultation over the summer so that a planning application can be submitted in autumn of this year.

In parallel, city council proposals for major improvements around the centre, including the pedestrianisation of Collin Street and improvements to Carrington Street will follow later this year.

Some content and comments from this blog are originally from Property Week Online 27/01/14

Is property better than a pension for your retirement nest egg?

Britons are turning their backs on pensions in record numbers even though the main alternatives – Isas and buy-to-let – lack the generous tax relief that pension contributions attract.

Pension saving has fallen to its lowest level for a decade, with just 38pc of people putting money into plans in 2009/10, compared to 46pc 10 years earlier, according to the Department for Work and Pensions.

With stock markets subjecting investors to stomach-churning volatility, poor returns on most asset classes and a steady decline in annuity rates, it is perhaps no surprise that fewer people are saving in pensions.

Residential property valuations may have been struggling since the financial crisis, but, despite this, buy-to-let has still managed to fare better than many other asset classes over the past decade.

Arguably, as close as you can get to figures for the average returns from professionally run buy-to-let property investments is the IPD UK Residential index, compiled by global property data company IPD. In the decade to 2010, residential property generated an annualised return of 7.1pc, adjusted for inflation, compared to 0.8pc for shares, 3pc for gilts and 3.7pc for commercial property.

Experts are divided as to which is the best way to save for your retirement. Pension, buy-to-let and Isa all have their supporters and which is right for you will, to a large extent, depend on your age, the type of person you are and how much money you are earning.

Property

Roll back to the middle of the last decade, before buy-to-let played its part in bringing the economy to a halt, and it seemed everyone was building their retirement on bricks and mortar.

The credit crunch may have brought buy-to-let to a near standstill in 2008 and 2009, but all the signs are there that it is starting to make a gradual comeback, with the number of landlords taking out mortgages for buy-to-let properties growing by 16pc last year, according to the Council of Mortgage Lenders.

For those with money to invest, it is easy to see why. Rising rents have seen yields on buy-to-let properties jump to 6.6pc, having stayed within a range of 5.9pc and 6.3pc for the previous five years, according to lender Paragon.

Ray Boulger, senior technical manager at John Charcol, said: "If you have found a property where the rent will cover the mortgage repayments you have two big questions. First, will rents go up if and when interest rates rise so they still cover your mortgage? And second, will property prices increase over the long term?

"If you are worried about an increase in interest rates, then you can get five-year fixed-rate buy-to-let deals at just under 5pc, compared to just under 4pc for shorter deals," said Mr Boulger.

He pointed out that one key difference with buy-to-let compared to other ways of saving for retirement is the ability to borrow to gear up your investment, which is not usual for Isa or pension saving. That said, you can borrow 50pc of the value of your Sipp to fund purchases such as commercial properties.

Buy-to-let mortgages that require a 25pc deposit are common, however. "Gearing your investment in this way means if the property only increases in value by 2pc a year, that works out at an 8pc annual increase on your investment," said Mr Boulger.

"While your short-term view of the property market may not be positive, it is hard to believe that house prices are not going to rise over a 20- or 30-year period."

Isas

Have become a popular alternative for those put off by the inflexibility of pensions, offering the ability to shelter up to £10,680 a year from the taxman – half of which can be in cash on deposit – as assets held within them are not subject to income tax or capital gains.

Unlike pensions, which can only be drawn after the age of 55, withdrawals can be made at any time, making them ideal for people who want access to cash in the event of an emergency, or who think they may end up on means-tested benefits when they retire.

Ros Altmann, director-general of Saga, said: "If you think that you are going to be affected by means-tested benefits when you get to retirement, you are better off putting your money in an Isa.

"That way, if you get to retirement and find that saving has not been worthwhile because you will be little or no better off, you can spend the money on that trip of a lifetime."

With a pension, you can only do this if your pot is so small that you are allowed to take it as a cash lump sum, under a special rule that allows funds worth less than £18,000 to be taken as cash, 25pc of which is tax-free.

Ms Altmann argued that for young people, particularly those who are basic-rate taxpayers, locking your money in a pension makes little sense, particularly if there is no employer contribution being offered.

"Let's not forget that buying a first home is a form of retirement saving, too. Saving in an Isa to make this happen could be much more of a priority for young people," she said.

Pensions

Your money is locked away for decades and you are effectively obliged to buy a seemingly poor-value annuity. So why does anyone invest in pensions at all? Two main reasons – tax relief and employer contributions.

Tax relief is granted at your marginal rate, which means the higher your tax rate, the better deal a pension is for you. If someone aged 55 who pays income tax at 40pc pays £8,000 into a pension, the government boosts that to £10,000 with basic-rate relief.

A further 20pc tax rebate is given on filing a tax return. Because they are 55, they are allowed to withdraw 25pc of the pot as a tax-free lump sum. Allowing for this £2,500 withdrawal, and the £2,000 tax rebate, the individual then has £7,500 held within the pension for a net contribution of £3,500.

Mr Cox said: "When it comes to tax efficiency, a pension is the clear winner, particularly for higher-rate taxpayers."

Contribution levels are also higher for a pension than an Isa, with up to £50,000 a year, and from next April £1.5m over your lifetime is capable of being sheltered in a tax-advantaged environment. And contributing into a pension is even more of a no-brainer if your employer is prepared to match the contributions you make.

But the downside is that you cannot access your money until you are 55 and you have to draw your money as income.

Some content and comments within this blog post are originally from The EXPRESS newspaper 20/01/2014.

UK buy to let landlords feeling positive about 2014…

                                   UK buy to let landlords feeling positive about 2014…

Optimism among landlords in the UK remains at a record high with 33% expecting an increase in net value of portfolios and a fifth planning plan to buy property in the first quarter of 2014.

Landlords are looking to 2014 with an increasing sense of optimism for the wider buy to let market and the performance of their rental portfolios, according to the latest survey from Paragon Mortgages.

The specialist buy to let lender’s fourth quarter private rented sector trends survey of around 200 landlord customers, found that 38% of landlords are feeling optimistic about the prospects for their portfolio.

During the second half of 2013 landlords’ optimism has been at the highest level recorded. Those surveyed were also feeling positive about the value of their property investments with 33% expecting an increase in net value in 2014.

Just over a fifth of landlords are planning to invest in further buy to let property in the first quarter of 2014. Of those landlords looking to buy, large scale landlords were more likely to expect to purchase property at 25% than small scale landlords at 8%.

‘2013 has been a good year for buy to let and landlords certainly seem to be more active in the market. We have seen a steady increase in the levels of optimism among our landlord customers, and this looks set to stay in the New Year,’ said John Heron, director of mortgages at the firm.

‘We expect buy to let lending market wide in 2013 to be in the region of £20 billion and whilst this would represent a material level of growth over 2012 we should keep things in perspective,’ he explained.

‘This only takes us back to the level of buy to let lending that we had 10 years ago and over that period the private rented sector has increased by 80%. Any talk of boom conditions in the buy to let market would appear to be premature indeed,’ he added.

Some content and comments originally from The LANDLORD.CO.UK 15/01/2014.

2014 UK property market - whats the forecast?

With expectations for future house price growth are at a fourteen-year high the upward trend is set to continue, according to the Royal Institution of Chartered Surveyors.

Its latest report shows that almost 60 per cent more chartered surveyors across the country predict prices to continue rising next year, the highest figure since September 1999.

 The RICS figures also indicate that all regions of the UK saw price rises last month for the second successive month. The average number of homes sold per chartered surveyor also rose to over 20, compared to 16 over the same period last year.

Simon Rubinsohn, RICS Chief Economist, said: "It's no secret that the housing market is on the way up and prices are surging ahead in many parts of the country. The Bank of England's recent decision to withdraw the Funding for Lending scheme could well have some impact on the number of people able to purchase a home.

"One thing we are very concerned about, however, is the lack of both new and existing homes coming on to the market. As the Chancellor pointed out last week, housebuilding is on the up, but it is rising nowhere near quickly enough to make up the shortfall that has built up in recent years. If there is not meaningful increase in new homes, the likelihood is that prices, and for that matter rents, will continue to push upwards making the cost of shelter ever more unaffordable."

The Council of Mortgage Lenders' latest study, also released today, suggests that activity in the housing and mortgage markets will continue to rise in 2014, though argues that an "unbridled housing boom" is unlikely.

The CML is forecasting a rise in gross lending from an estimated £170 billion this year to £195 billion next year, and £206 billion in 2015.

"We think there are good grounds to be optimistic that the vast majority of households will cope with a slow but certain transition to more normal interest rates," said CML chief economist Bob Pannell. "This seems to be the game-plan which the Bank of England has in mind, but presumes, as we do, that the UK avoids a destabilising housing boom over the next few years."

Comments reprinted from The Independent, Thursday 2nd January 2014.

The final figures of the 2013 UK housing market

 The final figures of the 2013 UK housing market

Nationwide, the UK’s biggest building society, reported a 1.4 per cent jump in average house prices to £175,826 in December – the biggest rise in a single month since August 2009. This leaves prices 8.4 per cent ahead of a year earlier after a full 12 months of positive gains.

Mortgage affordability is close to the long-term average – supported by record low interest rates of 0.5 per cent – with households spending around 29 per cent of their income on repayments. But the supply of new homes has not kept pace with demand following the recent upturn in lending, building pressure on house prices and the ability of homeowners to make repayments as wage growth remains far more sluggish, according to the Nationwide’s chief economist, Robert Gardner.

He said the supply of new homes “remains constrained”, adding: “The risk is that if demand continues to run ahead of supply in the quarters ahead.”

The latest Bank of England figures showed mortgage approvals jumped 4 per cent to 70,758 in November –  above 70,000 for the first time since January 2008 and contrasting with falling business credit during the month. In November, Bank Governor Mark Carney acted to stem the flow of cash into the housing market by closing the FLS,  which allows banks to access cheap funding from the central bank, to mortgage lending and instead refocusing the scheme on business loans.

The mortgage lending surge has helped kick-start activity in the construction industry, which is in the midst of its longest hiring spree since 2008 according to the Chartered Institute of Purchasing & Supply. Cips’ December snapshot of industry activity, where a score over 50 signifies expansion, remained close to record levels, easing slightly from 62.6 to 62.1 in the month.

Construction firms have taken on staff for seven months in a row, the longest consecutive period of job creation for five-and-a-half years, as more confident clients give the go-ahead to projects. Commercial building saw the strongest growth in December, even outstripping housebuilding.

The survey from a sector that accounts for 6 per cent of the overall UK economy follows a strong December for manufacturers, raising hopes the UK can post growth in the final quarter  at least as strong as the 0.8 per cent between July and September. Tim Moore, Market senior economist, said the industry’s revival “should keep staffing levels moving strongly upwards” during 2014.

David Tinsley, BNP Paribas UK economist, added: “Overall, the picture from the data remains consistent with a UK recovery that has been fairly household-led. The housing market is recovering strongly and this has seen some useful rise in construction activity too. And this construction uptick is spreading beyond just housing, which is encouraging.”

Comments reprinted from BBC news, Sat 4th January 2014.