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How real estate can embrace the use of smart-tech

How real estate can embrace the use of smart-tech

 

The incredible speed at which organisations were able to transition to remote working when the pandemic hit in 2020 was a testament to the innovative and ever-evolving tech emerging in business operations.Now, two years on, even with social distancing restrictions behind us, employees up and down the country continue to work within either full-time remote or hybrid working patterns. For instance, ONS figures from May show that 24% of workers in the UK are still working hybrid.As a consequence of spending more time at home, many have started to take stock of the aspects of their property they find most important to them. In fact, research by FJP Investment at the end of last year revealed that nearly a quarter (23%) of UK adults had changed their property priorities as a result of the rise of remote working. And one area of housing demands where preferences are notably on the uptick is smart technologies.
Indeed, digital technologies have become increasingly integral to people’s personal and professional lives, and this integration has resulted not just from incremental consumer demands but also from significant societal upheavals that were brought about by the pandemic.As a result, consumers now expect digital amenities that create a comfortable environment that supports both family and professional life.Advances in smart homesInstalling smart-tech isn’t about having the newest gadgets on the market; instead, it’s a way for homeowners to make their lives easier, safer, more affordable and eco-friendlier.A centralised system that can control speakers, TVs, lighting and heating all in one is ideal for most, but for home workers, the added convenience and efficiency can ensure that they have full control of both their home and workplace. Certainly, recent research indicating a boost in smart kitchen appliances would support this. Figures from Wise Living show that Google searches for smart dishwashers are up by 62%, and smart overs have risen by 61%, alongside increases in other appliances such as smart fridges and washing machines.

Aside from handy productivity boosters, it’s likely that their money saving attributes will have also contributed greatly to the rise in smart-tech appliances. With inflation currently sitting at a 40-year high of 9.1% and energy prices through the roof, households feeling the financial squeeze are looking for ways to offset soaring bills.

Unsurprisingly, homeowners are turning to smart-tech to reduce these costs. Smart thermostats and heating are an effective way to control the temperature of a home – either through a smartphone or voice-activated smart home network. More efficient control over the thermostat will be particularly appealing for consumers when taking into account estimates by the Energy Savings Trust, that turning the thermostat down by one degree can drop energy bills by 10%.

The digital technology that accompanies smart appliances can also monitor and calculate energy efficiency and costs, therefore allowing users to stay on top of their bills. For example, a 4E report found that greater control over the use of energy and lighting through smart-tech could reduce a property’s energy usage by 30%.

Developers must stay on track

The shift in homeowner and investor preferences has come at speed; therefore, property developers and construction companies must remain on their toes when it comes to smart technology.

Keeping up with such trends will be key in increasing the properties’ value. A recent Whathouse? survey found that of 80% of estate agents, smart-tech had helped them sell houses. At the same time, more than 50% has sold property with smart-tech at a higher asking price than comparable properties.

Developers should therefore factor in smart-tech at the construction stage. Doing so will ensure that the integrated systems will work a lot more efficiently than if the tech was to be installed later on, in turn, allowing enabling to remain competitive through higher asking prices.

Moreover, developers will have the opportunity to meet another vital shift in investors’ preferences: sustainability. Recent research from FJP Investment revealed that for 39% of UK homeowners the sustainability and energy efficiency of their property become more important to them since remote working patterns became more normal. As such, embracing smart-tech will be key in ensuring new homes are meeting investors’ sustainability goals.

Since the onset of the pandemic, there has been a clear acceleration of technological and sustainability demands amongst buyers and investors. Clearly, technologies that facilitate a comfortable home working environment and can, somewhat, protect from soaring energy prices have come to the forefront of these introspections. This provides the property industry with an opportunity to assess its current construction procedures and anticipate the future needs of buyers and investors, in order to deliver sustainable and future-proof assets in today’s competitive market.

*Jamie Johnson is the CEO of FJP Investment

It adds: “The Millennial rent bill has fallen by nearly half from 2017 as many renters between their mid-20s and early 40s bought their first home. Despite tumbling homeownership rates over the last two decades, it is likely that Millennials collectively will be paying less rent than their predecessors, Generation X by next year.”
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Energy price rises may be even higher than previously predicted

Energy price rises may be even higher than previously predicted

 

New forecasts from an energy industry consultancy suggests that the average domestic consumer’s energy bills could soar to £3,363 a year from the start of 2023.This is significantly more than the £3,003 figure released by the government.The typical bill now is around £2,000 a year – this follows a rise of £700in April.
Some 23m households in England, Wales and Scotland have their bills governed by the energy price cap – including the vast majority of privately rented properties. The cap limits the amount suppliers can charge per unit of energy, and the standing charge, and from this winter, it is expected that a new cap will be announced every three months.The consultancy making the prediction – Cornwall Insight – says the ongoing uncertainty regarding Russian gas flows into continental Europe, as well as more recent concerns such as the halted strike by Norwegian gas workers, have led to an increasingly volatile energy market, driving the rise in wholesale energy prices which ultimately trickles down to consumers.While there is the potential that cap levels for Q1 2023 onwards could fall if the wholesale market retreats, with the Q4 2022 price cap currently due to be announced next month, “we are unlikely to see any significant decrease to these predictions” the consultancy warns.Dr Craig Lowrey, principal consultant at Cornwall Insight, says: “As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer Default Tariff Cap rise to what are even more unaffordable levels.“There is always some hope that the market will stabilise and retreat in time for the setting of the January cap. However, with the announcement of the October cap only a month away, the high wholesale prices are already being ‘baked in’ to the figure, with little hope of relief from the predicted high energy bills.“[Industry regulator] Ofgem are continually reviewing the cap and there are a raft of consultations and potential reforms which could impact these forecasts. However, as it stands, energy consumers are facing the prospect of a very expensive winter.”

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Young adults lie behind growing rental demand, analysis shows

Young adults lie behind growing rental demand, analysis shows

 

Tenants’ bills are expected to hit a record £63 billion this year – and much of it is down to the so-called Generation Z demographic joining the market.Lettings agency Hamptons says tenants across the country paid a total of £31 billion in rent during the first six months of this year, a two per cent rise on the same period a year ago.The agency’s latest market snapshot says: “Rising rents mean the amount of rent paid by tenants has more than doubled since 2008 and has topped the 2017 peak, despite there being around 275,000 fewer private tenants than there were five years ago.”
The study highlights generational shifts in the rental market. It says as Generation Z – that’s those people born between 1997 and 2012 – become independent and lave home their rent bill will rise 10-fold compared to three years ago, leaving them paying more than Baby Boomers – the group defined as being born between 1946 and 1964.Generation Z tenants are forecast to pay £11.7 billion in rent this year, around a fifth of the country’s total bill and a more than threefold year-on-year jump. By contrast, Baby Boomers will pay £8.9 billion in total this year, a seven per cent fall on 2021.Meanwhile, Millennials – yet another demographic group, those born between 1981 and 1996 – paid 49 per cent as much rent as they did in 2017 as more of them bought properties.Hamptons says: “Generation Z’s rent bill is rising at a faster pace than when the previous generation, Millennials, started to leave home during the 2008 downturn, with far fewer buying their own place. And on their current trajectory, they are likely to be paying more than Millennials within the next three years.”It adds: “The Millennial rent bill has fallen by nearly half from 2017 as many renters between their mid-20s and early 40s bought their first home. Despite tumbling homeownership rates over the last two decades, it is likely that Millennials collectively will be paying less rent than their predecessors, Generation X by next year.”

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Housebuilder prepares eco-friendly homes ready for extreme temperatures

Housebuilder prepares eco-friendly homes ready for extreme temperatures

A typical comment accompanying news of the UK heatwave is that our homes are not built for 40-degree heat.Many residential homes lack air conditioning and are said to be built to trap heat, which is useful in winter but not when temperatures reach Saharan levels outside.National housebuilder Bellway has begun building an experimental eco-house called ‘The Future Home’ as part of a research project which could influence how homes are built, used and sold in the future.
Bellway’s ‘The Future Home’ is being built at The University of Salford’s net-zero research facility Energy House 2.0 that has been part funded by the European Regional Development Fund.The house will test innovations in building materials, the effects of double and triple glazing, storing solar energy, recovering heat from wastewater, and how to make most efficient use of air source heat pumps.The house will be tested in temperatures as high as 40C and as low as -20C. Weather conditions including wind, snow and solar radiation will be created in the chamber.Energy House 2.0 officially opens later this year and will be working alongside industry investigating how housing design can progress to enable the UK to achieve its net zero carbon emissions targets.The research facility will contain two environmental chambers that will accommodate four houses and has the ability to replicate over 95% of the world’s climatic conditions.Jamie Bursnell, group technical and innovations manager for Bellway, said: “The results of this project have the potential to change how we build homes – and how we live in them.

“In building this home, Bellway is taking a lead in the housebuilding industry to test technologies to help meet net zero carbon targets.

“However, with many of these innovations, we don’t yet know how they will function for real families in real homes, or what their running costs will be. This is particularly important when energy costs have risen so significantly, and homeowners are being hit heavily in the pockets.

“Energy House 2.0 will enable us to find out how everyone can operate their homes more efficiently and how new technologies can assist our efforts in reducing carbon emissions by building more efficient homes.

“The research will produce reliable data that can help us all to make changes. We will compare the theoretical and real performance of different energy methods, finding out how our habits impact on energy consumption and retention.”

Bellway started work building its energy house last month and the build programme is scheduled to be completed in October

Jamie added: “Many of the technologies we will be testing are due to be in common use in new homes by 2026. This project provides us with the opportunity to test their effectiveness and to create solutions to any challenges we encounter.

“The results will help us to deliver more energy-efficient homes and to advise people on how to make best use of new technology to control energy usage and running costs.”

Energy House 2.0 is one of a series of test sites Bellway has set up across the country to work with new energy efficient technologies.

Currently, four ‘Future Homes’ are being built in Callerton, Northumberland, which will be available for open sale and homeowners will work with Bellway to monitor energy usage as part of Bellway’s wider carbon reduction strategy.

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Ban on charging ground rent on leases comes into force today

Ban on charging ground rent on leases comes into force today

 

The government’s ban on charging ground rent on new leases in England and Wales comes into force today.

From today, anyone buying a home on a new long lease will now be freed from these annual costs.

Landlords are  banned from charging ground rent to leaseholders, under a new law that the government hopes will lead to fairer, more transparent homeownership for thousands of homebuyers, helping to level up opportunities for more people.

In preparation, many landlords had already reduced ground rent to zero for homebuyers starting a new lease with them.

Leasehold minister Lord Stephen Greenhalgh said: “This is an important milestone in our work to fix the leasehold system and to level up home ownership.

“Abolishing these unreasonable costs will make the dream of home ownership a more affordable reality for the next generation of home buyers.”

Future measures, announced last year, include a new right for leaseholders to extend their leases to 990 years at zero ground rent and an online calculator to help leaseholders find out how much it would cost to buy their freehold or extend their lease.

Commenting on the changes, CILEX (Chartered Institute of Legal Executives) head of policy, Jonathan Walker, said: “The ban on ground rents is positive news for anyone considering buying a leasehold property and important progress towards ensuring safety and security for all householders.

“Problems still remain however, and it is disappointing that there is no retrospective inclusion of current leasehold tenants within the Act. They will still be obliged to pay their existing rents, even in cases where they are seeing those rents escalate – some doubling every ten years. Those attempting to sell on properties will find ground rents prove unattractive to buyers who now have the option of purchasing a rent-free leasehold property, and many will experience difficulties when looking to remortgage, or extend or vary their existing leasehold.

“Such fundamental changes to the leasehold market must be implemented alongside awareness raising and education amongst both consumers and professionals so that both understand the implications for property transactions.

“It is vital that we see a continued programme of reform that benefits those who are new to the leasehold market whilst not disadvantaging or restricting those currently within the system. We hope to see further measures to address residential leasehold houses and cap ground rent for all existing leasehold properties.”

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Canopy and Housing Hand announce new partnership

Property Management

Canopy and Housing Hand announce new partnership

 

Rental guarantor service Housing Hand, and renting firm Canopy, have announced a partnership that will further the companies’ missions to reduce barriers to private renting.

The partnership will see Housing Hand support renters who would otherwise be ineligible to move home. As a result, an increased number of tenants who were previously locked out of the housing market, will now have the ability to find and move into their new home. While doing so, they will use the renting process that Canopy provides.

Nearly 9% of all Canopy references over the last year required a Guarantor, and the company says there is no doubt this number will only increase even more over the next few months given the current economic climate. Canopy has already seen the proportion jump to over 12% in the last 3 months.

Housing Hand has operated as a guarantor services provider for over nine years. The company is backed by a strong financially rated UK insurer, to underwrite its rent default liability, and has partnered with and served over 7,000 accommodation providers. During that time, Housing Hand has processed more than 80,000 tenant applicants and guaranteed over £600m worth of rent. The company’s focus is on opening private renting to a wider pool of individuals by removing traditional barriers.

Canopy provides an ecosystem for renters, letting agents and landlords, improving the lives of rental households by providing access to tools, services and products that fix pain points and enable them to improve their financial health.

From July 2022, Housing Hand will be working with Canopy to serve as a rental guarantor for those who want to rent but don’t meet traditional referencing requirements.

Individuals usually have to earn 2.5 to 3 times the annual rental amount in order to be eligible to rent a property. With Housing Hand, they only need 1.5 times net earnings to qualify, which significantly lowers the threshold for accessing a rental property.

Housing Hand serves as the individual’s guarantor, which means that the risk sits with Housing Hand, and not with the landlord. 100% of rent is covered 100% of the time, meaning that the landlord can access a wider pool of potential tenants and renters can unlock their next move.

Chris Hutchinson, Chief Executive Officer of Canopy, said:

“We often hear about renters who are likely great tenants but are unable to meet the minimum criteria expected by the housing market. By partnering with Housing Hand, the biggest rent guarantor service in the UK, we are able to support more of these renters in finding a new home, while ensuring that landlords actually have even more protection.”

“Rising uncertainty in the wider economy is leading to a growing need for guarantor services and now our housing market partners can say yes to more potential renters while at the same time, reducing the risk they face.”

“For renters, choice is key. For those who are asked to provide a Guarantor but are unable to find one, or don’t wish to use a family member, this service enables them to move into a property without having to pay more rent upfront.”

James Maguire, Head of Sales and Business Development at Housing Hand added:

“We are delighted to be partnering with Canopy to make renting more accessible and to ease the process for tenants, agents, and landlords alike. With no cap on the number of professional renters that Housing Hand can guarantee, we are opening the market up to a wider pool of tenants for our partners, while reducing risk and increasing occupancy across the private rental sector.

“We look forward to a long and successful partnership with Canopy and further collaborative innovations over the coming years.”

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Bank of England raises borrowing costs – industry reaction

Bank of England raises borrowing costs – industry reaction

 

In a move that will have surprised no-one, the Bank of England’s Monetary Policy Committee lifted borrowing costs by 50 basis points, taking UK interest rates to a 13-year high of 1.75%

It is the largest rise in UK interest rates since 1995 but the rate remains far below what was considered ‘normal’ before the financial crisis of 2008.

The MPC took decision in the face of rising inflation and projections indicating that the UK will enter recession in the final three months of the year.

Industry Reactions

Simon Gammon, Managing Partner, Knight Frank Finance:

“Mortgage rates are now changing on a daily basis and lenders are giving borrowers and brokers little notice about repricing.

“We’re seeing two significant impacts on borrowers. Firstly, some homeowners who are nearing the end of their terms are facing a shock when they come to refinance, because they are unable to borrow as much as they hoped.

“Secondly, those who are looking to buy are realising once obtainable properties are now out of reach. The question for them is now not “how much can I borrow?” but “how much can I afford to borrow?”. This is a subtle but very important shift in borrower behaviour that is driving people to re-evaluate the price at which they can buy.”

 

Nicholas Hyett, Investment Analyst, Wealth Club:

“The Bank of England is playing catch up after some bumper rate rises from the ECB and Federal Reserve in the last month. The resulting rate hike may be the largest in nearly 30 years, but it was also widely expected, and the market reaction has been modest. Instead, the real focus today is on how much further the bank is willing to go as it seeks to bring inflation back down to its 2% target.

“The current inflationary spike is being driven by global food and energy prices, and higher interest rates in the UK will do little to alleviate those pressures. Stronger sterling has the potential to provide some relief. However, rising rates in the US and Europe mean the BoEs actions haven’t helped the pound much, and sterling is currently trading near its weakest level against the dollar in over 40 years.

“The risk now is that higher interest rates start to squeeze consumer and commercial borrowers too much, strangling the life out of the economy without significantly easing the cost-of-living crisis.

“Markets still think the Bank has a rate rise or two in the tank, but to some degree UK monetary policy is now caught in global forces over which the Bank has little control. Inflation will rise or fall according to what happens in Ukraine not Threadneedle Street, and rate decisions are dictated by moves at other central banks as much as by the MPC.”

 

Tom Bill, head of UK residential research at Knight Frank:

“Rising rates will dampen demand in the UK housing market but there won’t be a cliff edge moment. With mortgage offers lasting for up to six months and the majority of homeowners on fixed-rate deals, the impact will be more gradual.

“The Bank of England’s decision is a step back towards normality after 13 years of ultra-low borrowing costs. At the same time, supply is rebuilding following the distortive effects of the pandemic and stamp duty holiday.

“As rates and supply normalise, the current period of double-digit house price growth will come to an end.”

 

Iain McKenzie, CEO of The Guild of Property Professionals:

“Wrestling inflation under control and reducing the cost of living is the number one priority at the moment. Ultimately, this is key to ensuring that people can keep up with their mortgage and rent payments.

“Those on a tracker mortgage or people moving onto a standard variable rate will see their repayments increase again, adding to the pain from the surge in the cost of energy and essential goods.

“Homeowners on fixed-rate mortgages are in a better position, with no immediate effect on repayments. Keep an eye on the date when you are due to remortgage, as our research shows that around 1.5 million fixed-rate mortgages will end this year.

“These decisions could also affect house prices in the coming months. Over the last two years, we have seen unprecedented demand for property, which is in large part due to the ultra-low interest rates that have made getting a mortgage easier.

“As more people have wanted to get their foot on the property ladder, house prices have soared. Another consecutive interest rate rise could make potential buyers more hesitant about taking on a mortgage. If it does, we will likely see property prices cool off in order to entice more people to buy.”

 

Jason Tebb, CEO of OnTheMarket:

“This latest rate rise was widely expected, given continued high inflation, but we don’t expect it to quash positive buyer and seller sentiment in the housing market.

“As long as buyers remain confident about obtaining the mortgages they need and being able to afford them, increases in rates, while unwelcome, are unlikely to result in a slamming on of the brakes.

“Even with this half-point rise, it is still a comparatively cheap time to borrow money; in a few months’ time, the picture could be very different.”

 

Frances McDonald, research analyst Savills:

“Today’s increase was not unexpected and will have been factored into many buying decisions, though successive rate rises are undoubtedly contributing to slowing house price growth. Rates are in line with our forecast assumptions for 2022, with the expectation that annual price growth will slow to 7.5% by the end of the year, down from its current 11.0%.

“The five base rate rises we have already seen over the last six months have caused a significant increase in the cost of mortgage debt. For someone borrowing a 75% mortgage, the average quoted 2-year fixed rate more than doubled over the year, from 1.39% in June 2021 to 2.88% in June 2022.

“Although these rate rises will have the greatest impact on new entrants to the market and those on variable or tracker mortgages, they will also affect those wanting to trade up the housing ladder, particularly given the strong price growth we’ve seen of late, unless we see lenders absorbing some of the increases.

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Second home owners face extra bills as tax loophole set to close

Second home owners face extra bills as tax loophole set to close

 

Second home owners face higher bills that could run to more than £1,000 a year under fresh government plans to close a tax loophole.

Michael Gove, the Levelling up Secretary, is set to announce new rules that will mean second home owners can only register for business rates if they can prove they let the properties for at least 70 days in a year.

Currently, they are permitted to pay business rates, which are cheaper than council tax, if they make their property available for letting for 140 days in a coming year.

The move comes following a surge in the number of holiday lets in England, with around 65,000 residential units currently registered, up from 50,960 in 2019.

About 97% of the 65,000 holiday let properties have a rateable value of £12,000 or less, making them effectively exempt from paying business rates.

Housing minister Chris Pincher told the press: “We have committed to close the loophole in the business rate system.”

The government’s proposals are expected to be announced very soon.

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Almost a third of property sales collapse because lenders ‘getting tougher’ – claim

Almost a third of property sales collapse because lenders ‘getting tougher’ – claim

 

There has been a notable rise in the number of property sales falling through due to tougher mortgage lending conditions, it is claimed.

According to new figures from Quick Move Now, 31% of agreed property sales collapsed prior to completion in the second quarter of the year.

Of the sales that fell through, the property buying firm claims that 30% failed due to buyers being refused funds by mortgage companies. Danny Luke, Quick Move Now’s managing director suggests that this demonstrates growing caution from lenders.

Luke commented: “It’s unusual, in this day and age, for buyers to have an offer accepted on a property without having an agreement in principle in place with their mortgage lender. This would suggest that the 30% of failed sales attributed to difficulty securing a mortgage are due to buyers being turned down during the formal mortgage application process after initially securing an agreement in principle. This indicates that underwriters are getting tougher in the level of risk they’re willing to accept, both in terms of buyer circumstances and finances, and properties they’re prepared to lend on.

“Overall, the fall through rate has remained stable throughout the first half of this year, falling just one percent between the first and second quarter, but the reasons for failed sales tell an evolving story about the challenges currently being faced by the property market.

“We’ve already touched on the 30% of failed sales attributed to difficulty securing lending, but it seems it’s not just lenders who are showing growing caution. An extraordinary 50% of failed sales were attributed to the buyer changing their mind, pulling out in favour of another property, or pulling out after an unfavourable survey report.

“Growing inflation and cost of living have made it inevitable that both lenders and buyers would start to show greater caution. We have also seen delays in the conveyancing process that are resulting in an increasing number of buyers being required to apply for extensions to their mortgage offers. Those that were initially offered a mortgage may find that they’re unable to secure an extension to their offer, even if their circumstances haven’t changed. With lending criteria toughening up, difficulty securing mortgage finance is an issue that I suspect we will see much more of in the coming months.”

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Online estate agency agrees partnership to help buyers raise a deposit

Online estate agency agrees partnership to help buyers raise a deposit

Proportunity, proptech neolender, has agreed a new partnership with online estate agency Griffin Property Co. to help home buyers finance the deposit needed to acquire a property.

The partnership will offer buyers alternative ways to finance their first home. Proportunity provides equity loans to homebuyers similar to the UK government’s “Help to Buy” scheme but available for any home not just new builds.

The initiative allows homebuyers to afford homes with only a 5% deposit, reducing the amount they need in savings. The Proportunity equity loan of up to £150,000 or 25% of the house price, sits on top of the maximum mortgage they get from a mainstream lender.

The equity loan, in addition to the mortgage of up to four and a half times income, means they can effectively borrow up to six times their income. For instance, a typical household income of £60,000 and a deposit of £25,000 could go from an affordability budget of £295,000 to £393,000, according to Vadim Toader, CEO and co-founder at Proportunity.

He said: “It’s our mission to unlock the future of home financing to meaningfully improve our customers’ lives. We’re always looking for ways to add value to our aim of assisting home buyers, which is why we’ve partnered with Griffin Property Co.”

“Griffin Property, like us, is committed to assisting customers by providing the most cost-effective access to the major property portals, as well as an experienced team to assist customers at every step of the process. We know our customers are in good hands when it comes to finding their dream home. We are delighted to have partnered with an award winning agency, providing the best in class service.”

Nick Neale. Director, at Griffin Property added: “Through Proportunity, we’re able to offer our home buyers more options to suit their budget. Our sellers also benefit from more interest in their properties. The fact that Proportunity uses proprietary machine learning technology to identify homes in high potential growth areas also gives our buyers and sellers confidence that they are buying at the right value.”