Tag Archives: savills

Numbers renting set to rise substantially as markets lock them out of home purchase

The number of households renting is set to rise by 1.2 million over the next five years, to more than 6 million in 2019.
Two thirds of under 35s will be renting, while an older age group of ALFs – asset-less forty-somethings – will become a major renting phenomenon. These are some of the predictions laid out in a new research report on the private rented sector, delivered by Savills.
London is where the most acute changes will be seen. Private rented households in the capital are expected to rise by 250,000 to 1.24 million by the end of 2019, more than a third of all households. In contrast, the number of owner occupiers is set to fall; while the numbers in social rented housing are expected to see a very modest increase overall.
The number of ALFs is set to rise by 30% over the period, this growth in a group that has already doubled since 2001. Such people in the age range 35-49 will typically have few financial assets, and possibly little put away for old age. “There is an increasing number of forty-somethings unable to get on the housing ladder in the current mortgage environment,” said Lucian Cook, responsible for residential research at Savills. Such people are going to become increasingly reliant on their parents for support, despite their advancing years. The only solace in this, say Savills, is that many more of the older generation were in a position to buy their own homes, and end their working lives asset rich.

Housing minister defends pace of rental programme progess

Housing and planning minister Brandon Lewis has jumped to the defence of the government’s efforts to promote the private rented sector.

“Thanks to our dedicated Private Rented Sector Taskforce, we’ve identified more than £10 billion in potential investment for homes specifically built for rent,” says Lewis in a letter to the Financial Times, just published. He insists the £1 billion Build to Rent fund, designed to pump prime development of long term rental housing, “is well on track to have contracts in place for up to 10,000 new homes specifically for private rent by March 2015″.

Lewis’s decision to leap to the defence of government initiatives comes after a critical article in the Financial Times, published on July 29. That article noted the failure of a £7 billion guarantee fund, half to support affordable housing development and half for private rented projects. “Whitehall had planned to back investors who bought rented homes, but the structure of its guarantee did not cover the construction period, which is seen as the riskiest part of the housebuilding process,” said the FT.

Emma Reynolds, Labour’s housing spokesman was quoted being critical of the scheme’s failure, while James Coghill of Savills also noted that the market had failed to be inspired by the government plan.

Separately, the Build to Rent funding – a loan from government that will have to be repaid – has seen some take-up and was described by Coghill as a “catalyst”. That initiative has not been without criticism, however, and required developers to bid for a tranche of funds, then wait for due diligence to be completed. The complicated nature of the scheme has, according to other reports, pushed some developers to choose open market sale instead as a simpler exit from housing projects.

In his letter, Lewis insists the original article “portrays an inaccurate picture of our efforts to build a bigger and better private rented sector.”

New online portal to shake up lettings and home sales markets

A group of estate agents is launching a new online letting and sales portal, to challenge market leaders Rightmove and Zoopla.

OnTheMarket is due to launch in January 2015, and is backed by some of the country’s largest estate agents. Members of the group formed to deliver it, called Agents Mutual, were driven to act by the rising charges that existing websites are charging them for listings.

“OnTheMarket has the appeal to attract the full spectrum of consumers and it has the gravitas to distinguish our brand as the natural home of locally visible, full service independent estate and lettings agencies,” said Agents Mutual chief executive Ian Springett.

The group already has more than 2,900 lettings and estate agencies committed to join, with another 100 joining every week. When agents sign up, they commit to advertising all their properties for 5 years and to list them on only one other competing portal – a commitment that threatens to break the duopoly in the market that Rightmove and Zoopla appear to have. Among the big brands that are reported to be on board with the new venture include Savills, Knight Frank and a number of regional estate agency chains.

With consumers increasingly using tablets and smartphones to access the internet, it will be interesting to see how the new portal differs from its legacy competitors.

Dublin apartment block for sale for EUR40 million

Anyone looking to take a significant position in the Irish private rented sector will be taking a closer look at the Marker Residences, currently being offered for sale by the Dublin office of agent Savills.

An asking price of EUR40 million has been put on the block, containing 84 apartments on a site overlooking Dublin’s Grand Canal Docks. The block, which also includes a small commercial element of 898 sq metres, is effectively fully let and generates around EUR2.5 million a year in rental income.

The block is sure to be of interest to Canadian residential investor CAPREIT which, through its newly established Irish company IRES REIT, is already making significant inroads into the Irish market, as reported here.

Savills describe the block as “one of Dublin’s most prestigious residential developments” with the property offering “a rare opportunity to acquire a fully income producing trophy asset”. More details here.

 

 

Planners failing to allocate enough land for homes

Agent Savills has calculated that current planning policies will lead to a shortage of 160,000 homes across the south of England by 2018. Local planners are simply not allocating enough space for new development in their areas, to meet expected demand.

The problem is, while each of them is relying on someone next door or nearby to take up the slack, every authority is playing the same huge game of NIMBYism – the Not In My Back Yard approach to housing development. Savills took the UK target of 240,000 new homes needed a year in England, a figure calculated by the Town & Country Planning Association, and drilled down to individual areas.

Thurrock, Dartford and Gravesham  are just three areas – all to the east of London – where sensible provision has been made. The majority of other local authorities are failing to meet demand, with Surrey, Berkshire and Buckinghamshire noted as falling considerably short of need.

“There is a real crisis looming,” warns Savills planning director David Jackson. “Local planning authorities need to act with urgency and in cooperation with neighbouring authorities to plan for the scale of housing delivery now needed right across the South of England.”

Savills list showing housing provision shortfall, area by area.

Savills list showing housing provision shortfall, area by area.

“The Chancellor’s recent commitment to a new ‘garden city’ in Ebbsfleet, with an initial 15,000 new homes is welcome, but it is a drop in the ocean – the equivalent of just four months’ requirement for housing in London,” says Savills planning director, Jonathan Steele. “New towns or Garden cities alone are not therefore a panacea. A long term commitment is required by government and other agencies to unblock infrastructure and other constraints to ensure that rates of housebuilding achieve a sustained and substantial increase.”

Savills has suggested local authorities need to form an “arc of cooperation” to help address the situation. The big problem is, with an election not too far off, there are no votes in housing developments – most people, if asked, would prefer not to see development near where they live.

More details on Savills’ findings here.