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In Property Eye we provide a weekly roundup of recent property news items:-
Kate Bush’s former home in on the market.
Wuthering Heights, the biggest selling single for Kate Bush, was based on the Yorkshire characters from Emily Bronte’s book of the same name but Wuthering Heights the house, a six bedroom family home, is found not in the Yorkshire Moors but in Eltham south east London.
The Victorian manor house, built in 1856, was home to the singer from 1985 to 2003. One of the six bedrooms was once Kate’s dance studio and parts of one of her music videos was filmed there.
On the market for £2.6million the 5333ft2 property benefits from high ceilings, large orangery, formal dining room and walk-in wardrobe. The home is set in just under an acre of land and includes a koi pond, garden bar, tree house and has wrought iron gates displaying the name Wuthering Heights. The grounds back onto the Royal Blackheath Golf Course.
Versace Home for Sale
Where else would a fashion chief like Santo Versace live but in the heart of MIlan’s fashion district? The four-storey home was built in the 1950s, and offers a deeply stylish interior, with beautiful mosaics. It is for sale with a guide price of £41.6 million
Mary Tyler Moore’s Estate on the Market
With a guide price of £9.5 million the charming English-style property which was the former home of Mary Tyler Moore, the American sitcom actress is now available. Ideal for horse lovers, it has plenty of stables, an outdoor and indoor ring, and land for the horses to roam in. There’s also a pool and – just in case you needed it – a carriage house.
House builders Confirm Buoyant Market
Bovis and Persimmon have both reported impressive half year results.
Bovis Homes half year financial statement for the 6 months to 30th June confirmed an 8.9% increase in pretax profit up to £53.8m from £49.4m last year. Revenue increased to £350.7m from £322.1m and legal completions were a record 1,525 homes, compared with 1,487 in the corresponding period last year.
Bovis increased its interim dividend to 13.7p from 12.0p per share, and said it intends to increase the full-year dividend to 40p from 35p.
Persimmon, one of the UK’s largest housebuilders, said its half-year profit rose 45% as strong conditions in the housing market boosted earnings. Net income increased to £237m from £163.2m a year earlier whilst the number of homes sold rose 7% to 6,855.
Persimmon’s revenue increased by 11% from a year earlier to £1.33bn, while its underlying operating profit margin widened to 20.5% from 17%. Earnings per share increased to 77.3p from 53.5p.
The company said it expected a good autumn season after the summer holiday period draws to a close.
Kings Cross Development Begins
The sale of a 42.5% stake in the King’s Cross Central Limited Partnership jointly owned by the government and logistics provider DHL has begun with potential investors having to express their interest by 7 September.
Proceeds from the sale of the government’s investment in the 67 acre site (expected to realise around £345m) will be returned to the Treasury.
Overall the King’s Cross estate is being developed into 8m sq ft of mixed-use space, consisting of offices, apartments, retail space, educational establishments and leisure areas across 50 new and refurbished buildings. It also includes 26 acres of public realm, including 10 new parks and squares, 20 new streets and 3 new bridges across the Regent’s Canal.
Radical new rent policy to be introduced
Dolphin Living has confirmed plans to introduce a radical new rent policy at Hackney’s New Era Estate with rents to be based upon household income for residents from 1 January 2016. Dolphin Living acquired the New Era Estate in December 2014 from US fund manager Westbrook Partners who had been planning to refurbish the estate and raise rents to market level, prompting protests from residents led by comedian Russell Brand.
Dolphin Living said the new rent policy launched this week offers tenants a choice in how much rent they are likely to pay in the future by giving them the option of either signing up to a new rent policy primarily based around household income, or remaining on a standard rent that doesn’t take into account household income, but will result in greater future increases.
The agreed new rental policy will use research by the Joseph Rowntree Foundation into living costs to provide a formula upon which to calculate how much rent those tenants who choose to opt in will pay. This will effectively involve a means test on a household’s annual income to calculate how much rent they can afford to pay.
It will see a tenant’s rent increase only by CPI inflation plus 1% if their current income level provides them with more than enough disposable income to cover the Joseph Rowntree Foundation’s Minimum Income Standard for their household.
Jon Gooding, chief executive, Dolphin Living, said: “Following extensive research and by working closely with the residents of the New Era Estate, we are pleased to offer a choice for our residents designed to best suit their financial needs. By offering an ‘opt-in’ rental scheme, our calculations show that two thirds of residents will be better off – however, we will also introduce a standard rental option should they prefer.”
EU Reforms Pose Threat to Fixed Rate Mortgages
Smaller UK banks and building societies may find it too expensive to offer fixed rate mortgages if proposed EU changes to the way that derivatives are traded come into force. Derivatives are crucial to the lenders in the way that they hedge against interest rate rises allowing them to negotiate with a counterparty to mitigate the risk. Under the proposed reform such arrangements would need to be via a central counterparty which would significantly increase costs. The Building Societies Association has urged the EU Commission to follow the example set by US regulators and exclude smaller lenders from the proposed changes. The EU have yet to respond.
August House Prices Stay High
House prices have dipped in value by an average of 1.5% from July to August in each year since the credit crunch but this year’s decrease of 0.8% is the smallest decline since then. The main reason is the shortage of properties coming to market with potential sellers put off by difficulties in finding and funding their next purchase. More purchasers are looking to repay their mortgages over longer and longer terms in an effort to make monthly repayments more affordable – latest figures show that 20% are now seeking to repay over 30 years which adds an average of £23,297 more to repayments compared to a 25 year mortgage.
Croydon Introduces Landlord Licensing Scheme
There are around 30,000 private rented properties in the borough of Croydon and the council have developed a licensing scheme to raise housing standards and tackle unscrupulous landlords who undercut their competitors on quality and price. Under the scheme any private landlord caught renting out a property without a licence from October will face fines of up to £20,000, while anyone breaking licence conditions can be prosecuted and fined up to £5,000.
More than 1,000 private landlords have already taken advantage of an early-bird discounted licence on a total of more than 1,550 rented properties. Available since 1 July, this £350 discounted licence goes up to £750 per private rented property when the borough-wide scheme goes live on 1 October.
A typical licence lasts five years but those failing to meet their licence conditions may have to pay £750 each year. All applicants must prove they are fit and proper.
A legal bid to stop Croydon Council’s plans was rejected in the High Court last week.
Student Housing Schemes Go Ahead
Three big student housing deals have been announced this week reflecting the continued growth in the sector.
Knightsbridge Student Housing has secured £41.5m of debt financing from Investec Structured Property Finance for two developments in Southampton. The two sites have planning permission for a total of 823 rooms and a combined gross development value of £59.7m. The larger 467-room development on St Mary’s Road has a gross development value of £31.3m and the other 356-room site at Back of the Walls has a value of £28.4m
The deal with Investec will help to fund construction, which is due to complete by summer next year in time for the new academic year and is the seventh financing package that Investec has put together for Knightsbridge.
The second big deal involves Singaporean developer Lum Chang which has agreed to buy Kelaty House in Wembley for £25.5m, expanding its portfolio in the UK. The site, has planning consent to be redeveloped into a mixed-use development with consent for 599 student beds and a 198-bedroom hotel, with vacant possession available in February 2016.
Further north, Empiric Student Property has exchanged contracts, subject to planning, on a forward funded development in Nottingham. The £18.4m development, known as The Frontage, is a 162 bed, student accommodation scheme and will proceed once planning consent is received and the group has acquired the freehold to the existing 1980s office conversion which is behind a Grade II listed façade located in the centre of Nottingham and within walking distance of Nottingham Trent University and the city’s retail and leisure attractions.
The scheme comprises 152 self-contained single and double studios as well as three commercial units at the ground floor level, which are let to restaurant tenants. The acquisition will increase the group’s presence in Nottingham to a total of 337 beds.
The student element of the property is expected to be delivered for September 2016, in time for the 2016/17 academic year.
UK student housing investment in 2015 has passed £3.8bn in the first six months of the year and is set to hit a record £5.75bn by year end, according to the latest figures released by JLL. The growth in investment volumes comes as UCAS has witnessed a steady increase in university applicants, with a 2% rise compared to May 2014.
Private Rented Sector Housing Guarantee Scheme
The government’s Private Rented Sector Housing Guarantee Scheme (PRS) requires developments to be of a minimum value of £10m and to deliver residential developments only. The government hopes that it will play a major part in rectifying the chronic housing shortage.
Many housing associations are considering moving into the PRS in the wake of the government’s policy to extend Right to Buy to housing association tenants. Notting Hill Housing Association is the first to express interest in the scheme but others are expected to follow suit.
The PRS is in desperate need of more purpose-built stock as the majority of homes currently in the PRS are Victorian terraces and converted flats in need of modernisation.
Housing associations delivering PRS schemes would not only raise the standard of housing but would also help to alleviate some of the strain on the fastest-growing type of housing in the UK. While build costs will be higher, the significantly higher rents placed on the PRS, particularly in London and in strong rental markets such as Cambridge, Manchester and Leeds, provide an attractive proposition for social housing providers looking at diversifying their business activities.
In 2013-14, the PRS succeeded the social rented sector as the second-largest housing type in Britain, while a recent report by PwC estimates that the sector will account for 7.2 million households by 2025.
If the Right to Buy scheme extension to housing associations fails to improve on the replacement record seen over the last 35 years for local authority housing, coupled with the 1% fall in social housing rents from April 2016 for four years, investors in housing associations may decide to move away from the social housing arena, unless a greater focus is placed on the PRS.
Under the current Right to Buy scheme, in place since 1980, an estimated 1.88 million council homes have been sold to tenants. The government claims that every housing association home will be replaced one for one, financed by local authorities selling off their most expensive properties. However, of the 1.88 million council homes sold through Right to Buy, only 345,000 local authority homes have been replaced, resulting in a shortfall of more than 1.5 million homes.
Given the chronic shortfall in housing supply across the UK (annual housing delivery has missed government targets in every year since 1973), the house-building sector cannot afford to see further falls in supply at the lower end of the market.
Couple make 800% Profit
Ex-council tenants of a London flat have sold their home for a record £1.2million having bought the three-bedroom property in Covent Garden in 1990 under the right-to-buy scheme for just £130,000, netting a massive 800% profit.
The 1,118 sq. ft flat is in a private mansion block which was once owned entirely by Westminster Council before being sold off. A report earlier this year found that 31 per cent of former council homes are now owned by private landlords and can fetch more than £800-a-week in rent in the London borough of Westminster.
More than two million properties bought under the right-to-buy scheme – introduced by Margaret Thatcher in the early 1980s – have been sold off over the past 30 years. In April, David Cameron announced plans to dramatically extend the original policy by offering discounts of up to 70 per cent to enable 1.3million families in housing association properties to buy their own homes.
Repossessions continue to fall
The Council of Mortgage Lenders has reported that repossessions fell to their lowest ever level in the second quarter of the year as more homeowners stayed on top of their mortgage payments helped by a combination of low interest rates, relatively low unemployment and rising wages.
The three-month period saw 2,500 properties repossessed by lenders, down from 3,000 in the previous quarter and from 5,400 in the second quarter of 2014.
In 2009, 48,900 homes were repossessed, averaging more than 12,000 per quarter.
Plans submitted for Redevelopment of railway works
Regeneration firm St Modwen has submitted an outline planning application for the £100m mixed-use regeneration of the railway works site at Wolverton, Milton Keynes.
The proposals for the 40-acre site include around 300,000 sq ft of new commercial buildings, a new discount food store, a heritage centre and 375 new homes set amongst extensive landscaping.
The plans are due to be determined by Milton Keynes Council before the end of the year.
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