We are delighted to be sponsoring The Private Development of the Year (up to 25 units) Award at the Homes for Scotland 2017 Awards Ceremony. The awards will be presented at the Annual Lunch. Homes for Scotland is a respected commentator on housing and planning matters, challenging policy and decision makers on behalf of members and the many thousands of Scots looking for new homes. Our membership of the organisation reinforces the importance that we place on the housing market in Scotland.
I was interested to read analysis of the housing market by Lloyds Bank showing that the number of home movers in 2016 fell by 4%. To put the housing market in prospective the figure for 2016 still remains half of the figure reported in 2006 and I think shows the need for continued government support for the housing market. Interestingly there was also a report from the National Association of Estate Agents advising that they reported an increase in the number of first time buyers in December 2016, reaching the highest figure since December 2001. This is a positive statement, however, it does go against the trends I am actually picking up from the coal face. I continue to urge the Scottish Government to support the housing market by using all means to increase the supply of the properties becoming available on the market and also increasing and continuing support for first time buyers. I will continue to monitor and report on these trends.
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.
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.
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.
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.
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.
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.
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.
As Sir Isaac Newton famously said “what goes up must come down”. This applies to everything apart from taxes. This shown by the failed attempt in the 70’s to massively increase the tax burden which had a negative impact on the tax take. It was also shown by Reaganomics in the 80’s when tax came down and the take actually increased. I am disappointed that the Scottish Government has not reviewed the rates of the current residential Land and Buildings Transaction Tax bands and in particular extend the 5% rate beyond the current £325,000 cap. I understand that revenue raised from LBTT continues to drop despite the increase in rate and this is surely a reflection on the damaging impact this is having on the activity in the Scottish property market. I would call on the Government to review the additional dwelling supplement which again I think is proving unwieldy and is having a detrimental impact on the property market activity. Speaking from experience, I act for a number of investors who have either stopped their purchasing programme or alternatively have factored in the 3% into the price being paid and reduced the price accordingly. I am not against the idea of an additional dwelling supplement but think perhaps a more realistic 1% level would have been preferable. I also think there is scope to amend the Capital Gains Tax rules so that the relief for selling your sole or main residence is tapered perhaps over a 5 year period i.e. you must have stayed in your sole or main residence for 5 years or more, to benefit from the full relief. The benefit of this tax is that it is not paid by a purchaser and would be paid out of profit, making it a lot more bearable. It is time that the Scottish Government realised the importance of the housing market to society and the economy and supported it accordingly.