INFLATION NOT BREXIT

I was interested to read a comment from former RICS Residential Chairman, Jeremy Leith, advising that inflation has taken over from Brexit as the biggest threat to affordability and confidence in the housing market.  I was also listening to an item on the radio after the inflation announcement, advising that in normal economic times with inflation rising and the value of the pound weakening, the first lever that would be manipulated would be an increase in interest rates.  It will be interesting to see what announcements, if any, there are from the Governor of the Bank of England in relation to potential interest rate increase.  I await further meetings of the MPC with interest.

I think that a rise in interest rates at this stage would be very damaging to the economy in general, and the housing market in particular, as despite positive growth figures, I am still concerned about the sustainability of the economic recovery and foundations upon which it is being built.

Whilst I am of the view that any uncertainty is bad for the economy and therefore bad for the housing market and that Brexit is therefore having an impact, I do think that here in Scotland there is more damage caused by talk of ‘INDY2’.  I will no doubt be reporting further on this in the weeks and months to come.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

 

TAX BREAKS FOR PREFAB HOMES – LET’S GET BRITAIN BUILDING

I was very interested to read an article in The Times on Saturday 7 January 2017 regarding proposals from the UK Government to give tax breaks for a new generation of prefabricated home manufacturers.  This is part of a package to reinvigorate Britain’s failing housing market and to ensure that the government hits its target of building a million new houses in the next five years.  I do think that this is a welcomed proposal as there have been some significant improvements and innovations in the house building process recently and house builders of all sizes should be encouraged through tax breaks to investigate and take advantage of these new techniques.

This article in The Times coincided with a very interesting article I was reading by Graham Norwood in which he led the call for more direct housing i.e. council house/housing association properties, making the point over the last few years successive governments of varying political hues have failed to inspire the house builders to increase the amount of properties that are being built.  I am a great believer and in fact think that it is of fundamental importance to society that people have the opportunity to live in quality housing.  The scourge of homelessness and dilapidated properties is one that desperately needs to be tackled.

I feel that it is important that for both political and economic reasons that our society is underpinned by home ownership.  I have detailed in previous blogs the assistance that I think requires to be given to first time buyers and I would wholeheartedly support any incentives to help builders increase the amount of properties that are being built but I do also think that there should be a controlled increase in the amount of social housing being built.  I very much liked Graham Norwood’s suggestion of “community housing” although it is interesting that as part of his article he does state that he would much prefer to live in a privately owned property than one that is either council or community owned.  For this reason I would advocate a return to some form of controlled right to buy with strict rules and guidelines in relation to properties being built and, for every property sold under right to buy, a certain number would be required to be built to replace them.  I think that some form of right to buy or shared equity scheme could be used to assist people to actually get on the housing ladder and might be a means of controlling house prices.  I will explore this theme further over the weeks to come.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

 

FURTHER HOTEL DEVELOPMENT IN DUNDEE

I was delighted to hear the recent announcement in relation to the opening of a new Indigo Hotel in Dundee.  This significant investment will transform one of Dundee’s mills and will add 96 bedrooms.  I understand that work will commence sometime in 2017 with completion expected in the summer of 2018.  This investment will breathe life into the east end of Dundee and is another welcome example of the rebirth of the City.  This will follow the launch of budget hotel chain Sleeperz to the City, part of the redevelopment at Dundee railway station.  A proposed boutique hotel for customs house and various other hotel investments continue to reinforce Dundee as an up and coming tourist destination.  I also understand that there will be some announcements from Dundee Council in the next few weeks in relation to further projects at the Dundee Waterfront.  It is great to see Dundee continue to go from strength to strength and a very exciting time to work, live and be part of the City.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

FOXTONS – 2017 REPORT

I was interested to read the statement from Nic Budden, the Chief Executive of Foxtons.  Foxtons have just reported that its revenue for the final quarter of 2016 was down by a quarter compared to the same period in 2015 and its total revenue for 2016 is 11% less than the year before.  Whilst it has to be remembered that Foxtons are a London centric Estate Agent this is perhaps an indicator of future market conditions.  Nic’s comments advised “looking ahead we expect trading conditions to remain challenging in 2017 and it is likely that 2017 volumes (for sales) will be below those in 2016.”

Whilst I don’t think the Scottish market is as vulnerable to brexit as the London market it will be very interesting to see activity levels for this year.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

 

SEASONAL SLOWDOWN WORSE THAN NORMAL?

I was interested to read a recent report on the UK housing market advising that the seasonal slowdown in property supply was much sharper than usual in December.  House Simple claims new property listings across the UK were down 46.9% in the month of December.  Whilst I am not experiencing this kind of shortfall, December is always an unusual month given the festive period and the fact that most people will wait until January before they list their house on the market.  I do think supply of housing stock will be critical in 2017 and I will be really interested to see what Quarter 1 listings are like as I think this will be a good indicator for the property market’s year ahead.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

PROPERTY FACTORING

I was very interested to read an article by Professor Stewart Brymer on the future of property factoring.  This is something that I think is very important for improving the quality of flat dwellers lives in relation to less stress regarding common repairs and also the maintenance of common parts such as roof stairwell etc.  This would also go a long way to assist in relation to the maintenance and improvement of the tenemental housing stock.  I think there is scope for the Scottish Government to legislate and to formalise factoring and I think that local authorities should consider making factoring compulsory where a property owner has applied for a grant or perhaps where a block contains an HMO.  I also think lenders and surveyors should also encourage owners of flatted/tenemental properties to be involved in a factoring scheme as it would surely protect and enhance the value of the asset.  This would be a low cost way for the Scottish Government to assist in relation to the maintenance of the housing stock and also go a long way to improving the quality of life of flat owners.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk

COME FLY WITH ME – PART II

Readers of my blogs will know that I am a great advocate for the City of Dundee and think that the improvements that are taking place under the guidance of the Council are absolutely wonderful.  This includes not only the V&A but also the new railway station, Malmaison, various hotels and other regeneration projects.  Like most Dundonians, I was very disappointed to hear about Flybe’s decision to cancel its direct flight from Dundee Airport to Amsterdam.   I would call on the Scottish Government to take steps to rectify whatever caused Flybe to cancel this flight and should it be the infrastructure and technology available at Dundee Airport then this should be rectified as a matter of urgency. If this cannot be rectified then I would urge the relevant authorities to consider creating a hub airport at Leuchars.  Not only would this be a welcome investment into central Fife, it is vital to Dundee and the surrounding area that there is a local, regular international airport connection.  This would allow Dundee to build on the momentum of the V&A and would also increase the number of visitors to Dundee or, at the very least, make it more likely that they stayed in some of the new accommodation being built in the city.

Lindsay Darroch
Partner – Head of Property 
@LindsayDarroch
www.blackadders.co.uk