Property Eye #6
Property Eye #6
These recent property news items caught our eye:-
Celebrity Watch
Beckhams Plan Ahead
Happy birthday to David Beckham who turned 40 on 2nd May. He received a great birthday present when his application to install air conditioning into his ￡31.5 million mansion in Holland Park was given the go-ahead. Never ones to stand still the
Beckhams’
have now submitted plans to improve the outside space. The changes involve lowering the paving by 70 cm to “improve the relationship between the house and garden”; raise trellises and add a wooden Wendy House (no air con mentioned).
Clooney Hits Problems
Whilst theBeckhams’celebrate there is less good news for George and Amal Clooney. As previously reported in Property Eye Clooney submitted plans to replace an existing outhouse in the grounds of their multi million pounds manor house in Sonning with a wooden pavilion to house a 12-seater home cinema, swimming pool and hot tub. But in official documents published on South Oxfordshire District Council’s website the planning officer comments that the proposed pavilion is “not appropriate to the riverside setting and would result in the refusal of the application”.
In correspondence relating to the plana council officer suggested removing this element from the proposals but the couple have instead opted for “a significantly smaller River House” of a size similar to the existing outhouse. A final decision on the plans is pending.
Mirren gives up French and takes up Italian
Award winning actress Helen Mirren and her director husband Taylor Hackford are selling their partly restored house in Provencal France (which they have owned for 10 years) to concentrate on doing up their home in Puglia Italy. The couple, who also own properties in London, New York and LA hope to achieve a sale price of around ￡463,000 for their 3 bed French property and commenting on the decision Ms Mirren confirmed that “Italy is our home, so now I’m trying to learn Italian”.
Bringing home the Bacon
Francis Bacon’s old Battersea studio is for sale for ￡1.65 million. The painter shared the four-bedroom mansion flat with two friends and it also doubled as a studio for the famous artist.
Reaction to Election Result
The return of a Conservative Government with a slim but workable majority surprised but mainly delighted the property world. Here are some of the reactions as reported in the press in the immediate aftermath of the result being confirmed:-
Lucian Cook UK head of residential research at Savills’ expected that much of the demand held back during the pre-election period will flow back into the market over the next 18 months as the potential threat of a “mansion tax” on high-value homes is now removed. British Property Federation’s chief executive Melanie Leech stressed the need for a coherent plan to deliver increased housing supply; to follow through on the commitment to fundamentally review business rates, and also to take action to put in place the right infrastructure – including real estate – that will allow the country to thrive. She also voiced the need to have clarity and a clear timetable as soon as possible about the proposed EU Referendum to minimise uncertainty. Uncertainty over the EU referendum also worried CBRE head of UK research, Miles Gibson because most of his firm’s clients feel investment would suffer if the UK were to leave the EU. Another to pick up this theme was Guy Grainger, UK chief executive at JLL, who felt that most British businesses remain committed to a strong position within the European Union and will need to engage in the reform debate to see if a referendum can be avoided. However he also stressed that the continuity of the government’s main policy objectives for the past five years will be very helpful for investors and developers in the housing market which he expected to continue to grow in line with stronger economic prospects, particularly in the regional cities and the South East. Executive director at Douglas & Gordon, Ed Mead, is confident that the election result will restore overseas investor confidence in UK real estate assets, leading to a surge in capital values over the next five years. Countrywide chief executive, Alison Platt was happy that the clarity of the election result will lead to greater activity especially in the ￡2m plus markets. She also anticipated that the new government will turn its attention to addressing the lack of housing supply by honouring its pledge to boost housebuilding through the provision of more affordable housing and more garden cities. Alan Brown, chief executive of house builder CALA Group, was emphatic that the election result is good news for the UK housing market because the Conservative party “ truly understands the intricacies of the housing crisis and is clear on how to address the UK’s chronic shortage of new homes”.
He was pleased that the distraction of the election is now out of the way but wanted the new government to further enhance some of their key policies, without the need for coalition negotiations. Particularly a renewed focus on speeding up the clearance of planning conditions while encouraging local authorities to bring forward more developments to increase the housing supply in their communities.
Royal Benefit
A survey of 1000 buyers by Onthemarket.com has revealed that many people would be prepared to pay more for a property in a street with a royal sounding name. Royal, Palace, Lord, Queen, King and Crown led the way with 40% prepared to pay an extra ￡5000 for the privilege; 10% would pay up to ￡30000 more and 3% an extra ￡50000 or more.
Royals Overlooked
Apartments with open views of the back garden of Buckingham Palace are in development at No 1 Palace Gate. The existing civil service offices are being demolished for conversion into 72 homes. Only 14 of the properties will enjoy the views at an asking price of ￡30 million (although demand has been so strong that prices maybe“tweaked higher” according to a spokesman for developer Northacre). The development will range from one to five bedrooms plus a 20 metre pool, gym, Pilates studio, steam room, library, mini-cinema, dining room and restaurant that will serve meals in the flats and dining room. The original building on the site was the Palace Hotel built in 1861 and the development will be in five styles – 1860s Italianate Renaissance; 1880s French Renaissance; 1880s French Beaux Arts; 1890s Queen Anne and contemporary. Apparently no security checks are planned on potential buyers and both the police and courtiers are happy with the scheme.
Not enough Bricks and Brickies
As we’ve previously reported in Property Eye there remains a shortage of bricks and bricklayers and the position is not improving. A state-of-the-trade survey by the Federation of Master Builders (FMB) discovered that over half of small and medium-sized construction companies continue to find it difficult to recruit bricklayers and twice the number find it hard to recruit skilled labour compared with a year ago.The survey also discovered that there continues to be a long wait for brick supplies with 62% of builders waiting for up to 2 months; 25% up to 4 months and 16% over 6 months. Commenting on the shortage of skilled labour the chief executive of the FMB said “The next government must ensure it sets the right framework in terms of apprenticeship funding and standards”.
Builders dismiss politicians’ new homes targets
Aspirations of the main political parties to build significant numbers of new homes have been dismissed as unachievable by house builders surveyed by Knight Frank. 67% claim that the maximum build could not exceed 180000 per year. This compares with targets of 200,000 (Conservatives and Labour), 300,000 (Lib Dems) and 1,000,000 over the next 10 years (Ukip). Housing experts believe that a minimum of 240,000 new homes are required each year to keep pace with demand. Builders and developers can’t get anywhere near that figure because of the shortage of skilled labour, limited development funding, lengthy mortgage processes and delays in processing planning applications by local authorities.
Maybe one solution could be the introduction of an American style build-to-rent sector in Britain as suggested by the Better Renting for Britain campaign. The campaign which is backed by not-for-profit housing associations, publicly quoted companies (including British Land), pension funds and corporate investors have written an open letter to the next government calling for a greater focus on promoting build to rent through single companies owning large portfolios of homes with the long-term occupier in mind. They also want local authorities to identify how much rented housing they need and then allocate land to it and for planning laws to recognise the difference between building for rent and building to sell.
Landlords running scared of proposed plans
Over three quarters of letting agents believe that the proposed plans put forward by the Labour Party in their manifesto (see our blog) to impose a minimum 3 year tenancy agreement and to restrict rent increases will result in reduced supply with existing landlords seeking to quit and fewer new landlords coming into the market. Two surveys, one by the Association of Letting Agents and another by Reed Rains and Right Move support these concerns and the latter also predicts a slow-down in rent increases from 3.7% to 1.7% over the next year (the increase in March was 2.1% according to the Office for National Statistics).
Retrospective Legislation - Landlords Read This...
If you are a landlord and took a deposit from your tenant before 6th April 2007 then as a result of back-dated legislation you must take action before 23rd June 2015 to place that deposit into one of three government backed deposit schemes. The three schemes are the Deposit Protection Scheme (free but no interest paid on the deposit); MyDeposits and Tenancy Deposit Scheme (both impose a charge of up to ￡24 but also pay interest on the deposit). Landlords must also provide tenants with “prescribed information” (which can be downloaded from the websites of the deposit schemes) which explains the deposit protection scheme and information on the tenancy. Take action now if you have not complied with both of these requirements or be liable for a penalty of up to 3 times the deposit.
Betting on Property Investment
Nigel Payne the former boss of Sportingbet has become chairman of K&C REIT and is raising ￡6million on AIM as an investment vehicle specialising in central London property. K&C REIT is a real estate investment trust that plans to build up a ￡500 million London property portfolio and offer a tax-efficient exit strategy for homeowners looking to sell up.
New Stately Home to be built in Cotswolds
Property tycoon Jamie Ritblat is mid-way through building an 18th century style mansion at his farm near Winchcombe, Gloucestershire. The mansion will have a main house comprising 11 bedrooms, billiards and cinema room, gun storage area, wine cellar and servants quarters, a kitchen wing with roof terrace and an underground swimming pool. The grounds will include a boules pitch, croquet lawn, tennis court and fruit cages.
North South Divide
Whilst the London property market showed double-digit growth in the year to March (up by 11.3%) prices fell in the North East by 2.9% during the same period. The big divide in the fortunes of home-owners in London and the South East (also up 11.3%) and those in the North East is now obvious. An increasing number of Northern families are trapped in negative equity (i.e. the value of their property is now less than the amount of mortgage they have borrowed).
Figures from the Land Registry also reveal that the overall average price of a home in the UK fell by 0.8% in March to ￡178,007 (compared to a peak of ￡181,049 in 2007) while the annual rate of growth slowed to a 13 month low of 5.3%.
In January the number of properties trading for a price in excess of ￡1 million fell by 19% to 851 compared to 1049 a year earlier. This is fuelling speculation that pre-election jitters about the possible introduction of Labour’s “mansion tax” are slowing the market. A view that is supported by reports of sliding sales from estate agents Countrywide and Foxtons and a drop in approvals for home loans in March down to 61,341 from 61,523 in February.
Zoopla looks to diversify
Property portal Zoopla has agreed a takeover of uSwitch the energy price comparison site in a deal that values uSwitch at ￡160 million which is nearly 10 times its earnings in 2014. The take-over which will expand Zoopla’s range of services was described by Zoopla’s founder Alex Chesteron as a “natural next move in the evolution of property portals. We help customers to make smarter decisions about buying a home and uSwitch will help them to make smarter decisions after they have made their purchase”.
Financial markets appeared to give approval to the sale with Zoopla shares rising by 16% to 215p immediately after the announcement.
Overseas Investment in London Property
Qatar’s sovereign wealth fund invested ￡1.9 billion in London’s property market in 2014 adding HSBC Tower in Canary Wharf to its existing properties which include The Shard, Harrods, The Chelsea Barracks and the Olympic athletes’ village. Not far behind came the Kuwait Investment Authority which invested ￡1.69 billion last year. Qatar has continued its massive investment in London property early into 2015 with the ￡2.6 billion joint take-over of Songbird (the Canary Wharf business district owner) with Canada’s Brookfield.
Hanging on for Election Result
An increase of 3.5% in Knight Frank’s rental index for the first quarter of this year (the highest quarterly rise in four years) suggests that more home-owners who had recently sold their properties were electing to rent until the result of the General Election became known. The number of tenancies agreed across the home-counties is up 18% compared to last year and rents have increased by 4.7% in the region. Demand for family homes in the ￡4000 to ￡5000 per month bracket was strongest.
Mortgage War Hot’s up
Close on news of HSBC’s record low mortgage rate of 1.99% for a 5 year fixed term (reported in Property Eye last week) comes news of a new record low for a 2 year fixed term of just 1.09% from the Co-Operative Bank. This beats the previous low of 1.19% set by the Yorkshire Building Society in February.
As with the HSBC offer the Co-Operative’s deal requires a 40% deposit and has an arrangement fee of ￡1,499. Even so a typical borrower would save ￡264 a year on mortgage repayments compared with the lowest rate a year ago and a substantial ￡1188 per year compared with the lowest rate at the time of the last general election.It seems that a 2 year term rate of less than 1% could be near as lenders continue to battle for market share.
Is Blue the new White?
Dulux have noticed the absence of colour in our homes with their latest TV advert featuring a sterile and bleak future in which colour is outlawed. Wickes are offering big discounts on all paints other than white. Could it be that the popularity of white and beige which has reigned supreme since the sixties may be coming to an end?
The latest look books for the well-known paint brands are filled with lots of bright colours and the Office for National Statistics has replaced white in its basket of goods used to measure inflation to reflect the increased shelf space related to coloured rather than white paint.
Brits are pretty cautious it seems so the really bright colours are still on hold but there is a definite trend towards blues, greys and greens and customers are definitely getting more adventurous with colours based on sales of the leading brands.
Builder gets ￡500,000 for cleaning gutters
A builder who cleaned the gutters of an Enfield pensioner for free has been allowed to keep the ￡ ½ million inheritance that the grateful pensioner left him in the will that he changed just weeks before his death a judge has ruled. The family of the pensioner whose body laid undiscovered for weeks following his death in March 2014 had contested the will but the judge ruled that there was nothing suspicious and rejected their claim.
French mayor sells land for 1 euro
The mayor of the French village of Champ du Boult midway between Caen and Mont Saint Michel in Normandy is offering 4 one thousand square metre plots of land in the village at 1 euro per square metre. Having unsuccessfully marketed the plots for 4 years at 12 euros a square metre the mayor has decided to boost the dwindling population by selling the land at a throwaway price and has been inundated with phone calls and email enquiries.
There are conditions to the sales – buyers must be families who will commit to build a house and set up a permanent home in the village. Otherwise the offer is open to all nationalities – there are currently around 30 brits living in the village. The four winners will be picked at the end of May.
Gnomifesto
Whilst 14% of people responding to a MORI poll in the week before the election saw housing as the most important election issue (compared with just 5% before the 2010 election) there was a bit of light relief from B&Q who created seven “party leader” gnomes. In the days leading up to Polling Day they were asking customers in their Sutton store which they thought best represented gardeners’ needs or which were more likely to “lead them up the garden path”. The result was unknown at the time we went to press but are eagerly awaited.
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