MD of Martin & Co’s Xperience is retiring… to a new job
Martin Stoop, the MD of Xperience that was bought out of L&G by Martin & Co in 2013, has retired. He will still consult for the group until June 2017 and has set up an new business called Martin Stoop Property Services. He’ll also remain on the board of The Property Ombudsman so it’s unclear what he’ll end up doing but it doesn’t look like a real retirement. It also doesn’t look like the most positive of separations with none of the usual language for an amicable retirement. Considering the deal was the group’s last and only acquisition, MCO may feel under pressure to contribute to the consolidation of the sector but it’s not my bet for taking a lead on that – I think Belvoir will. It has a track record of closing deals and generally being well liked in the sector.
House Prices: stable in July; rents up; nightmare neighbours cost £’000s
More house price data – the overall theme of stable selling prices and rents increasing with no discernible Brexit effect continues. Zoopla suggests house prices were stable in July. It also reported that 33% of houses for sale at the start of August have had a price reduction which is also about normal – it was 29% in April. JLL has reported that sub £2m property in London has fallen 2.6% in the last year (prime above £5m has fallen by 7%) but below £2m prices have been resilient. SDLT increases for higher value property is thought to be the main reason for the falls in higher value property although Brexit uncertainty hasn’t helped. A lettings data point- Homelet data showed UK rents up +2.3% yoy in July and +4% in London. That’s a slowdown for yoy rental growth in June for the UK and the same rate for London. The same ‘no sign but its early’ for a Brexit effect as we’ve seen from other data providers but overall lettings seem helpful. And here’s a point relevant to your PA investment in property – the insurer Privilege put a £ cost of having a nightmare neighbour at 8.2% of your house price. That’s £38k on average. The worst neighbours are unsurprisingly those with visible signs such as boarded windows or a wreak of a car on the drive – that will cost 10%. Good neighbours with visibly nice houses add 10% so that’s quite a swing between good and bad and suggests you should buy nightmare neighbours out.
The usual arguments from the usual parties on rent controls, scrapping SDLT and letting agent fees
The Residents Landlord Association has said Jeremy Corbyn’s plans for ‘secure tenancies’ with rent controls would ‘spell disaster for tenants’ by reducing supply. No surprise there but they should be reassured Corbyn’s path to PM is as distant as ever. The Society of Licensed Conveyancers has called for SDLT to be scrapped to support property transactions. The National Approved Lettings Scheme has opposed calls for letting fees to be banned in England & Wales (as it is in Scotland) basically arguing most letting agents wear halos so should be allowed to charge for their services. It’s hardly surprising that letting agent association and forum comments overwhelmingly want to continue to allow letting fees to be charged. Shelter, the charity, stirred the debate with a ‘mystery shop’ in Wales that showed a huge variance in letting fees (the highest being 12x the lowest) arguing that the practice is opaque and hard to compare therefore anti-competitive. Interesting that one of the most liked forum comments was “Highest 12x the lowest sounds like good competition to me… I know which one I would use”. Agents clearly don’t appreciate basic economic theory but perhaps that’s too much to ask from our agents. I would back a cap or ban on most fees, with most payment to letting agents coming through charges on the rent.
Confidence in property post Brexit – uncertainty but all’s still calm
A survey by Comparethemarket reported that 70% of buyers and 77% of sellers said Brexit won’t affect their decision but the one that got the headlines was that ‘only’ 50% of respondents said they were confident in the UK property market. I usually take a 50% result to mean ‘don’t know’ and that’s clearly the case here. The 50% was higher than the 30% who thought prices would fall. Another poll by OnePoll reported that 63% of sellers said they would not accept an offer 10% below the asking price. That’s also normal.
New Housing Minister and Labour leader hopeful housing policy: some early comments
The new Housing Minister, Gavin Barwell, has said he backs the 200,000 houses per year target, but not on Green Belt which should be protected and he’s against licensing all private landlords. He’s most recently said he is investigating how to make longer tenancies for renters in the private sector easier to obtain, mainly through new standardised rental agreements. As I’ve said before, any changes in the lettings industry tends to benefit the larger letting specialists like Belvoir, Martin & Co, Hunters etc as landlords see the benefits of the expertise to navigate the changes. This is especially true as only 5% of landlords in the UK do it as their main profession with most being single property landlords. Longer tenancies sounds tenant friendly but I would see it as positive for landlords too, assuming measures to evict non-paying tenants are not diluted. Meanwhile, Owen Jones, the Labour leader contender has said he’d like to boost housebuilding by 75,000 pa over the next 4 years (implying a similar 200,000 new homes per year), half of which should be social. That last is the main point, a return to social house building along with an ending of the right to buy. They will need to tread carefully but I think Gleeson looks in good shape in this environment. There’s significant demand for its product and it could position itself as a problem solver for councils and as an alternative to councils building for themselves.
L&G hires into build-to-rent business
L&G has hired Savill’s residential capital markets expert, Adam Russell, to help source land and funding for L&G’s B2R business. It’s an interesting sector but only small. L&G for example has only completed 3 projects for a total of 900 units and plans to reach 3,000 with an additional £1bn investment. Good but hardly a revolution for the sector and not really material in terms of solving the UK’s housing pressures.
Property Partner: trading slivers of the BTL market
Property Partner is a website aiming to be the ‘stock market for property’ allowing as little as £50 investment in buy-to-let. It’s not immediately clear the terms of investment: presumably its equity with the dividend tied to rent received (ie a share of the hit will be taken from defaults). With no listed residential property investment companies (K&C REIT Plc is the only residential REIT) it may get somewhere for accessibility but investor confidence and oversight will clearly be issues. It’s unclear what fees will be taken by Property Partner itself. A nice idea but its hard to see it going mainstream unless it comes out with some innovative attention grabbing projects.
Judicial review into limiting of mortgage interest relief for landlords: date set for September
Two private individuals are pushing for a judicial review into the limiting of tax relief on mortgage interest payments. The date for the hearing on whether a judicial review will be launched is 14th September. I’ll keep watching it but don’t expect a review. They’re arguing that “Clause 24 of the Financie (No.2) Act 2015” is an infringement on buy to let investors’ rights and want it declared null and void. I guess there’s nothing to lose but you have to think it’s going to be difficult to get the judiciary to overturn part of the government’s tax policy. They have received funding from the National Landlord’s Association and Belvoir to pursue the case to review. If a review is granted then further funding will be required.
That’s the latest in property. Have great days