For a change there’s been quite a lot of good news coming out over the last month.
There are now some real encouraging signs that the UK economy is on the mend.
Housing starts and sales are picking up as a consequence increasing confidence and of a couple of measures the treasury is introducing to boost the housing market. However, some experts have real fears that this could all result in another housing market bubble. See the Article on the “Help-to-Buy Scheme”.
Arrears on mortgages have hit their lowest levels since 2008, as the Council of Mortgage Lenders (CML) figures now show. The proportion of mortgages three months in arrears stood at 1.85% at the end of June this year. This is the lowest level since the first half of 2008, when it was 1.3%.
Mortgages in long-term arrears of over 12 months accounted for only 0.4% of the total, down from a high of 0.6% in the second half of 2009. Loans in arrears of between three and six months, and six to 12 months, were also both down to 2008 levels, at 0.85% and 0.61% respectively.
Re-possession cases for mortgage arrears in the first six months of 2013 totalled 15,700, the lowest number since the second half of 2007, when there were 13,100 cases. The CMLs current forecast is that 160,000 mortgages will end the year in arrears of more than 2.5% of the balance, again a return to 2008 levels.
On the lending side, lenders advanced 40,000 mortgages, worth £5.1 billion, to buy-to-let investors in the second quarter of 2013, this is according to data published by the CML. Both the number of buy-to-let loans, and the value of lending, was the highest since the third quarter of 2008.
Again, according to the CML, buy-to-let lending is continuing to recover strongly, but from a low base. The number of loans advanced in Q2 was 19% higher by volume and 21% higher by value than in preceding three months. Year-on-year, buy-to-let lending was 19% higher by volume and 31% higher by value.
On a less positive note, see the article “The Number of UK Estate Agents Going Bust Soars”
Despite the growth in sales and a report from the Royal Institute of Chartered Surveyors (RICS) this month claiming that in July UK house prices grew at their fastest pace since 2006, after a fourth consecutive month of gains country-wide, the number of estate agents entering insolvency has shot up.
It seems the recent pickup in the housing market has come too late for many agents who have just struggled on for too long in a market with low sales volumes. Fewer successful sales inevitably resulted in increased competition between firms and even as many diversified into lettings and management, this was not enough to save them.
The situation has implications for landlords who use struggling agents. When financial times are desperate, many agents will be tempted to use rents and deposits they are collecting on behalf of their landlords for working capital. When agents go bust in these circumstances, not only do landlords lose their rental income owed, they are still liable to repay back to tenants the deposits lodged with their agents.
Another sign of the times, the High Street continues to feel the effects of recession and structural changes in retailing and consumer behaviour. See the article: “Bank Closures put even more Pressure on the High Street”
As if the high street was not in enough trouble from a four pronged attack: aggressive parking wardens / high council parking charges, high business rates, out of town shopping and Internet online shopping, we can now add a fifth: bank closures.
Many of Britain’s high streets, which are already blighted with empty and boarded-up shops, are now likely to face even more disruption as the main banks start to cut costs by targeting bank branches that are no longer performing.
These factors have major implications for commercial landlords with investments in high street shops, offices and bank buildings.
Comments to: editor@landlordZONE.co.uk