Scotland’s Rent Controls Could Hinder Buy-to-Let Investment
The Scottish Government is planning to introduce rent controls in ‘pressure areas’ as part of a package of measures announced by First Minister Nicola Sturgeon last week.
The Private Tenancies Bill will offer tenants ” protection against excessive rent rises, while also giving clear rights and safeguards to landlords, ” Sturgeon said, amid concerns the measures are counter-productive to the government’s hopes of attracting institutional investment to deliver large-scale, purpose-build development.
Gerry More, who was appointed last October by construction trade body Homes for Scotland, to help drive investment into the private rented sector (PRS) said: ” Whilst a simpler, streamlined and fairer tenancy system is welcome, this should not be to the detriment of building the high quality and professionally-managed homes in the private rented sector that are required to help meet demand. “
” I am therefore concerned that this move could prove counter-productive since these pressurised areas are exactly where investment to increase the supply and quality of PRS properties is needed most. “
Gerry More’s comments were echoed by Pete Chambers, property partner at law firm Burness Paull, who said over-regulation of the sector could have a negative effect by scaring away the long-term investors that the government hopes to attract.
Chambers said: ” We are seeing a lot of UK funds and property companies looking at PRS in Scotland . Anything that makes investment less attractive in Scotland versus the rest of the UK could negatively impact upon the likelihood of these parties investing. This could result in reduced provision of rental property, which in turn could exasperate the housing shortage and push up rents – the very thing the legislation is designed to protect against. “
There are around 330,000 properties in Scotland’s private rented sector, of which an estimated 80,000 are occupied by families, according to campaign group PRS 4 Scotland. Another 14,000 are ‘houses in multiple occupation’ providing accommodation for around 60,000 people, while 130,000 are rented by couples or individuals.
An estimated 465,000 new homes are required by 2035 to meet demand but the Scottish Property Federation warned that rent controls could ‘sound the death knell’ for investment in the build-to-rent market.
David Melhuish, the trade association’s director said: ” If the Scottish Government wants to increase housing supply, then the introduction of rent controls is not the way to do it. We should be doing everything we can to encourage investment rather than regulate this sector before it has had a chance to take root. “
According to a government spokesman, investors have nothing to fear from the proposed legislation. A spokesman commented: ” Our aim is to provide good quality homes and protection for hundreds of thousands of families, modernising the private rented sector to make it more professionally managed and better regulated for those who want to live, work and invest in it. “
” We want to see supply grow to meet demand – this is the sustainable, long-term solution to addressing housing affordability. That’s why we are investing £1.7bn in affordable housing and will now exceed our target of delivering 30,000 homes by 2016, including 18,600 homes for social rent. “
The proportion of people living in the PRS in Scotland has doubled over the past 10 years, according to official statistics. Figures from the Scottish Household Survey , published in August show that 14% of Scotland’s 2.2 million households were renting privately in 2014, compared with 7% in 2004.
The percentage of people living in social housing declined from 32% in 1999 to 23% in 2007. The social sector has remained at around 23% of all Scotland’s households since then, and was 24% in 2014, according to the statistics. The percentage of people who own their own homes also declined from 66% in 2005 to 60% in 2014, although the proportion of households owning outright increased from 22% in 1999 to 30% in 2007, and has remained the same since.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Cyprus to Resolve Title Deed Fiasco or No Further Bailout
The European Union, European Central Bank and International Monetary Fund have combined forces to place pressure on Cyprus to immediately implement laws ensuring title deeds are passed directly to property buyers after purchase.
For decades, Cyprus’ deeds fiasco has left owners of newly developed property without title deeds to their homes, leading to disputes over ownership and in some cases losing their homes altogether.
Due to increasing pressure from British buyers of Cypriot properties in the last few years, Cyprus is having its hand forced to resolve the situation immediately, or the country will not receive the next instalment of its €500 million euro crisis bailout.
In 2008 in the immediate aftermath of the financial crisis, 50,000 British buyers in Cyprus petitioned Britain’s 72 MEPs to put aside political allegiances and work together on their behalf to obtain title deeds for properties purchased from developers in previous years.
The scandal came about as developers failed to inform potential buyers that the title deeds for their homes would be withheld for an unspecified time and that the land on which their property was built was in fact mortgaged by the developer and not purchased outright.
The consequences for buyers meant increased liability to property charges, a burden of huge legal fees and many were left unable to sell property to recoup losses. In some cases, developers declared bankruptcy and were then unable to transfer title deeds and full legal ownership to buyers before settling any mortgage debt on the land. Despite buyers paying for their homes in full, without legal proof of ownership there was simply no legal recourse available to them.
Title deeds are passed directly to buyers
The new laws ensuring title deeds are passed directly to buyers were to be in place by the end of last week, as demanded by the EU, the ECB and IMF, much to the relief of the thousands of investors who have still not received the deeds to their homes that were built years ago.
The Cypriot Council of Ministers has approved a new law which is now on its way through the Cypriot Parliament. Not only will it help those who have never received title deeds but it will also bring essential stimulus to the country’s struggling property market.
The government has unveiled a number of incentives set to benefit buyers and sellers and boost real estate investment. Anyone buying property in Cyprus from now until the end of 2016 will qualify for a 50% discount on the property title deeds transfer tax. There will also be no capital gains tax when those who buy in this timescale want to sell in the future, a saving of 20%.
Estate agents in Cyprus anticipate more enquiries from overseas investors on the back of the legislative changes. Ideal Homes International has seen increasing interest from British buyers. ” UK buyers are particularly excited about what they can get for their money, given the strength of the pound so far this year, ” said director Chris White.
” Cyprus’ historical relationship with the UK means that there are many aspects of life there that UK buyers feel comfortable with, everything from similar legal systems to driving on the left. Contracts are written in English and everyone speaks English too, which creates a sense of familiarity for UK buyers, ” he explained.
The Cypriot property market still has some way to go before recovering from the country’s economic misfortune in recent years. However, now there is more legislation and incentive in place for overseas buyers in Cyprus, sales are picking up. According to figures from the Department of Land and Surveys , the number of property sales in Cyprus rose by 22% in July when compared with a year earlier. In Paphos, which is very popular among British buyers, the number of sales was 30% higher than in July 2014.
Article by +Roxanne James on behalf of Propertyshowrooms.com
US Property Market Strong despite Stock Market Chaos
According to American media reports, job growth is continuing to drive a strong recovery in the US housing market, with mortgage starts last week jumping 17% to their highest level since April.
Despite the downward spiral caused by Black Monday on 24th August, mortgage applications for the same week saw an uplift of 11.3% compared with the previous week, according to a Mortgage Bankers Association report released on Wednesday.
” You had some borrowers looking to refinance who really took advantage of the short availability of very low rates, ” Mike Fratantoni, the association’s chief economist, said. ” You had a number of people following the market very closely. “
Volatility triggered by China’s economic slowdown
The widespread volatility triggered by China’s economic slowdown led to moments of very low interest rates on 10-year US Treasury notes – a key benchmark for the mortgage-lending market. The Federal Reserve has been preparing to raise interest rates at ‘some point’ before the end of the year and the resulting uncertainty prompted home-buyers to seek finance ahead of the expected rate-hike during last week’s market mayhem.
However, economists maintain that growth in the US housing market is underpinned by consistently rising demand driven by increased affluence and improved affordability as the American economy strengthens. Fratantoni said: ” We do expect improvement in the housing market to continue. Job growth and declining unemployment rate and wage growth – those are really the factors that we focus on. “
The trend in existing home sales, accounting for 90% of the housing purchase market is also increasing. Danielle Hale, director of housing statistics at the National Association of Realtors (NRA) said, ” It’s one of the key numbers we pay attention to and we’ve seen eight-year highs in those numbers recently. “
According to the NRA properties are selling at a faster rate than last year, with homes selling in July 2015 typically spending 42 days on the market before closing, compared to 48 days in July 2014.
Dan Porter, owner of Chicago realtors Porter House Properties told International Business Times: ” All those people who have been renting or living with mom and dad are starting to hit the market. ”
The US housing recovery has been slow in the wake of the financial crisis as potential buyers retreated to the sidelines. ” That normal flow was interrupted for a few years, so it will take us a couple of years to get to what I would say is normal, although everything is going in the right direction, ” Porter added
Home sales reached 5.59 million
Last July, the annual rate for existing home sales reached 5.59 million in the US, the highest pace since the 5.79 million recorded in February 2007. An improving job market bodes particularly well for the housing market as more people find themselves able to afford to buy their own homes.
Banks more willing to lend money
” As the US economy improves, banks are also more willing to lend money to prospective buyers “, Matthew Pointon, a property economist at research firm Capital Economics, said. He cited data from US mortgage processors Ellie Mae showing the rise in loan applications that won approval as 71% of mortgage applications in July 2015, up from 62% for the same month last year.
“Banks are feeling more confident,” Pointon said. “They’re looking ahead and they’re seeing a strong economy. They’re seeing people’s incomes going up.” Current growth in the US housing market is underpinned by strong fundamentals, indicating a sustainable recovery is now in full-swing.
Article by +Roxanne James on behalf of Propertyshowrooms.com
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