Month: July 2015

I was delighted once again to be involved with the judging of the Association of Scottish Business Women’s Annual Awards.  As usual, it was very interesting and, in fact, inspiring to speak to the various nominees and I wish them all the very best of luck.   I would also like to congratulate Alison and Wendy for their organisation of the judging process and a big thank you to my partner-in-crime, fellow judge Tracey Thomson from RBS Edinburgh for making a fun day.  For those of you who have not been before, I would thoroughly recommend the awards dinner on the 18 September this year.

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

Readers of previous blogs will know that I am concerned regarding the lack of properties coming on to the market which is causing a sharp increase in house prices.  With this in mind I was interested to see a headline from the Centre for Economics & Business Research advising that their prediction for house price rises, throughout the whole of the UK, has gone from 1.5% to 4.7% for 2015.  It is stressing that a chronic lack of stock has changed its views and predictions regarding the house price rises.

I am concerned that another unsustainable housing bubble is being created especially due to the lack of assistance for first time buyers and the support for small to medium developers.  The government needs to urgently tackle this problem.

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

Interesting to read a story from Estate Agent Today advising that the House of Lords as voted in favour of an amendment to the housing bill in relation to the right to buy scheme which would prevent charities being compelled to use or dispose of their assets in a way which is inconsistent with their charitable purposes.  As I have mentioned I am generally supportive of the idea of right to buy but  I do think that the proposals need to be very carefully considered before being enacted.  I will update you as soon as I hear further.

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

I was interested to hear on the Andrew Neil programme last week that three out of the four candidates standing for the Labour leadership dismissed the possibility of re-introducing the Mansion Tax.  This is a positive sign and hopefully we will now have a grown-up and sensible debate regarding assistance that can be given to the property market.

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

Interesting to read a report released by Right Move advising that the average asking price of a home coming to the market set a record high for a second month in a row.   As I have written in previous blogs, this appears to be driven by a lack of supply coming on to the market.  Right Move have advised that according to their stats the shortage is most acute for smaller homes with two bedrooms or fewer where Right Move sees the biggest demand in excess of supply.

I think this trend applies to most areas of the country, with smaller family homes in the right school catchment area proving very popular as buyers hit their affordability ceiling.  I am, however, noticing constraints on mortgage lending, although this is not reflected in official stats yet, and it will be interesting to see what impact this has on demand.

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

I was very interested to read a report from the Council of Mortgage Lenders advising that the Government and the Bank of England must not put too much of the blame for a lack of housing supply on the Buy-to-Let sector.  Paul Smee, the CML’s Director General, asked whether there was a risk that the Buy-to-Let sector was taking “too much of the wrap” for a wider policy failure to boost Britain’s housing supply.  I do agree with his view that slightly curtailing the Buy-to-Let sector may, in the short term, assist first time buyers but the negative impact of increased rent would mean that it would take longer for people to save up deposits and would probably outweigh this benefit.  Paul adds “the relative size and popularity of the Buy-to-Let market will ebb and flow under different market conditions, just as the flow of lending to owner-occupiers will.”

I do believe that the Government should make sure that there is further assistance available for first time buyers and I would advocate my guaranteed deposit scheme proposal open to new build and second-hand properties but limited to a maximum purchase price of, say, £150,000.   I will continue to keep you advised of reports.

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

As anticipated there has been a furore raised in the private rental sector with the governments changes announced in the most recent budget.  The chancellor’s plan aims to raise 600 million pounds over the next few years by restricting tax relief to buy to let investors.  A number of investors are already changing their investment plans in relation to freeing up pension cash to invest in the property market.  I have also been advised by a number of property management companies that landlords are talking about increasing rents to try and improve yields after the tax changes come into effect.  My fear is that the unintended consequences of the governments’ plans will be increased rents, less properties being available for rental and perhaps even an increase in the number of rogue landlords who try and slip through the net as far as declaring rents for tax purposes.  I am disappointed that the government did not look at the changes to capital gains tax rules as a means of increasing the money raised from the property market.

My view however, is that property investment is still a worthwhile addition to anybody’s investment portfolio and that the Scottish market in general and Dundee in particular offers a great place to invest.  I will keep you advised as trends develop.

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

I was very interested to read a report from the Bank of England advising that the demand for mortgage lending has hit a new high since December 2013.  The Bank of England report which deals with the second quarter of 2015 revealed that mortgage lending had increased significantly in quarter 2 of 2015 compared to sharp falls in the last three quarters.  Does this show a property market that is starting to take off?  I will continue to report on trends.

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

Following on George Osborne’s plans released last Friday to relax the UK planning rules and free up more brown sites for development,  industry leaders have responded positively but with a note of caution that these reforms do not go far enough.  In fact some industry leaders have been calling on further tax breaks for house builders.  I welcome any move by government to free up the planning rules and to make matters easier for people to start development.  I do agree that these reforms do not go far enough and that some tax incentives and support from banks is also required.  I also understand that there are some thoughts that rates relief for empty industrial units will be removed causing a rush of demolition and potentially freeing up further brown field sites for development.

All parties agree that there is a chronic shortage of housing supply in the UK and it is imperative that supply and demand are put onto a level playing field.  I will continue to campaign for all moves that improve the number of development sites available.

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

Readers of this blog will know that I have been a vociferous campaigner against the Home Report.  One of the flaws, highlighted during the property downturn,  was the fact that the Home Report only lasted for 3 months and lenders then required it to be refreshed.  The issue was that if an offer had come in at lower than the Home Report value when the surveyors were doing the refresh if they found out this lower value they tended to decrease the value of the property.

As followers of the property market will know there has been an increase in prices over the last 6 months.  We are now getting to the point where 50% or more of property transactions are coming in at higher than Home Report valuation.  Does this mean when the surveyor does the refresh they will increase the value?  This would seem to be logical although I am not sure how positive lenders would feel about this development.  I am in communication with a number of surveyors and will let you know the outcome.

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