The UK Housing Crisis: Supply and Demand

The UK Housing Crisis: Supply and Demand

2016 has been full of shaky times for the UK property market. However, there have been no actual signs of prices dropping, despite the Brexit naysayers’ warnings. Negative headlines about the UK housing crisis are still milling about, but there is one aspect of the property market in particular which is promising to keep the market afloat. That aspect is the continuing lack of supply.

The lack of properties for sale has helped to support the market, and to push prices higher. That’s before we even take the undersupply of newbuilds into consideration. This undersupply has been going on for decades, whilst successive governments have sought to garner good feeling among voters with artificial support of property prices. There is no end to this situation in sight at the moment.

There was a small fall in prices after the Brexit vote, reigniting hysteria over the UK housing crisis. Nonetheless, the UK continues to be a popular target for overseas investors, indeed, there was a surge in overseas interest following the referendum result. Indeed, looking at the state of the pound at present, it’s clear as to why we are gaining attention from overseas.

Along with the lack of supply, we are seeing a growing state of pent-up demand for property in the UK. A scarcity of properties, combined with high competition between buyers, is a recipe for further property price inflation. This, too, will affect the rental market, as more households find themselves priced out of the purchase market than is already the case.

UK Housing Crisis Affects Rental Market

Higher demand for rental accommodation, combined with a reluctance of investors to approach buy-to-let following the stamp duty hikes and other attacks on landlords in 2016, may push rent higher. Great news for investors, and build-to-let in particular; not such good news for tenants – those who feel the brunt of the UK housing crisis hardest.

The answer is new builds. However, we are struggling to meet demand in this area too. Currently, 200,000 new properties are required per year, and we are still falling desperately short of that. The population is growing, and everybody needs to live somewhere. Something, clearly, has got to give.

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Could Property Crowdfunding Help the UK Housing Crisis?

Property crowdfunding may offer a partial solution to this conundrum. Pooled funds being pumped into development of properties, particularly in areas like the in-demand North West, alleviates the buy-to-let problems that outright-ownership landlords are facing, as everything is managed through the SPV (Special Purpose Vehicle) in which the shareholders’ funds are invested.

Though property prices and rent will not be directly lowered by these developments, it may alleviate a small portion of the supply shortage. After all, every little helps.

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Buy To Let Obstacles Fail to Deter Investors

There have been a lot of buy to let obstacles this year. Hikes in stamp duty, reductions in tax relief, tightening of mortgage lending criteria, and, of course, Brexit. And yet, landlords have pushed back, undeterred.

Investors Undeterred By Buy To Let Obstacles

Industry figures released last week show that, rather than being put off by these buy to let obstacles, landlords swept back into the market with gusto in September. Connells Survey & Valuation have released figures also showing a strong and successful September, with buy-to-let valuations rising 24% on August’s figures. Rightmove, too, have revealed a 30% jump in buy-to-let enquiries since May.

Another surprising statistic: in the nine months of 2016, to end of September, more has been lent to landlords than over the same period in 2015. Buy-to-let valuations over 2016 are 0.4% up on 2015.

New rental listings, according to analysis by Rightmove, in the third quarter, were 6% higher than in 2015. Anticipated drop-offs in investor activity affecting tenant choices proved to be unfounded.

From London to the North West

Even in the heady London property market, there was a year-on-year increase in rental listings of 15% over Q1-3 of 2016. As such, these high stock levels on the market led to a drop in asking rents in Q3, down 0.7% on Q2, staying below £2,000 a month. Of course, up in the North West where things are weathering the Brexit storm best, during the same period, rents went up 2%.

In the run up to the changes in stamp duty in April, there was an inevitable rush to close on property purchases in the first quarter of the year. As such, there was a significant drop-off come April, though this may well be down to many property purchases being hastened through before April’s changes hit.

Since then, things have really bounced back. One feature of the recovery seems to be a trend for investors knocking sellers down on asking prices to take into account those stamp duty charges.

Planning Pays Off

For those investors who have factored in those tax and policy changes to their financial planning, there are still strong returns on the cards in the property market. Especially when compared to the dismal performance of savings, bonds and equities, the long term ongoing shortage of social housing and a dearth of house building, is making property an increasingly attractive investment option.

Alistair Hargreaves, from John Charcol mortgage brokers, says:

“I can’t see Government rescinding the tax changes they’ve announced and I don’t see the Bank of England making it any easier for lenders. But that said, the flipside is that lenders are having to innovate to get business and there are still lots of competitive options available for landlords.”

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In addition, Mr. Charcol mentioned that despite tighter lending criteria, there are some innovative buy-to-let mortgage options available. Moreover, he recommended that in most cases landlords should consider longer term fixed rates or lifetime variables which remove some of the uncertainty for their finances.

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The Future of Property Demand in the UK

Sheree Foy, founder of Source Harrogate, has told the Yorkshire Post her predictions for the future of property demand in the UK.

Firstly, she dismissed ideas that Brexit will have a long term effect. On the supply side, she says, not a great deal will change. Demand, however, may be affected. Growth forecasts show reductions over the next two years, and there are rumours amongst financial analysts of a 50-50 chance of recession.

Along with base rate reductions by the Bank of England to a record low of 0.25%, cheaper mortgage rates, and the prospect of further interest rate plummets, property demand may be a bigger issue.

But Foy is less interested in these matters, looking to the longer term.

So what are the big issues around property demand in coming decades?


Property Demand by Demographics

Over the next ten years, we will see a significant rise in the over 65 age group, combined with a dramatic rise in over 85s. One in five people in the UK right now will live to see their 100th birthday, according to the Department of Work and Pensions.

From this, Foy predicts a rise in property demand for bungalows, and other homes suitable for later life living. Foy labels these properties as “rare asset[s] with a guaranteed increase in demand” – and notes that those who plan ahead with their investments to meet this upcoming property demand are set to reap rewards.

Homes with smaller gardens, close to towns, with adapted kitchens and bathrooms, are all winners.

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Property Demand by Location

Over the last ten years, farming has become increasingly more automated, leading to an inward flow to towns, which are more attractive than ever.

On the other hand, public transport is becoming less available, with journey times taking longer and longer. Without a drastic overhaul of the public transport network, property demand in cities and towns could continue to rise.

Nonetheless, Foy is banking on a return to the country facilitated by technology. Better broadband connections and speeds are making home working an increasingly available option for many, whilst the predicted adoption of driverless cars in coming years will also relieve much of the strain of commuting. With this eventuality on the horizon, country living could equally be set to rise in popularity.

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Property Demand By Energy

As we move further away from dependence on huge power stations in favour of multiple source and sustainable energy sources, EPCs (Energy Performance Certificates) are set to become crucially important to the desirability of a property.

More locally generated power, from solar powers to wind turbines, are growing in use in domestic settings. Homes with adverse EPCs, Foy states, just aren’t selling like they used to.

To increase the desirability of your property, Foy recommends staying on top of energy efficiency in the home. Replace old boilers, insulate walls and roof spaces, double/triple glaze those windows, and look into home power generation options.

 


Planning ahead for future property demand is a key factor to take into account when investing in property. Choose your weapons wisely, and build a portfolio that will stand the test of time.


 

The Latest P2P News – 16/9/16

P2P News – All The Latest Updates

 

Hi guys and welcome to another P2P news round-up, as usual we will be giving you a snapshot of the latest goings-on in the P2P world. Today we look at an array of news items from there is no evidence of P2P investors underestimating risk to focusing on what the P2P and marketplace lending industry needs to do to go mainstream. Missed our last P2P news round-up? If so, catch up here.

No evidence of P2P Investors Underestimating Risk

P2P Lending

Last month, former FCA chief executive, Tracey McDermott, voiced concerns about the rapid growth of the P2P marketplace that could potentially leave some investors unaware of the risks.

However, the P2PFA’s (Peer-to-Peer Finance Association) director Robert Pettigrew, stressed that this was not the case.

Mr. Pettigrew recently mentioned that although approaches varied depending on the company, the P2PFA was dedicated to ensure investors were aware of all the risks involved.

In addition, he stated : “Different platforms have adopted a variety of approaches to ensure a high level of consumer understanding, but with continued grow and expansion in the sector, the focus on making sure that all investors have an awareness and understanding of the risks of peer-to-peer finance products will continue to be a major priority for P2PFA platforms.” (Bridging & Commercial, September 2016)

Platforms such as LendingCrowd and LandBay recommend that investors should require financial advice if they are unsure about the investing process.

Stock Market VS Peer-to-Peer Lending Investments – Who Wins?

stock market p2p

To buy stock, or not to buy stock that is the question! With recent markets in a volatile state you might want to look for an alternative.

Anyone who is an active stock market investor knows that it takes time to do your research (and a bit of guess work) to figure out where the market(s) are heading.

However, if you’re looking for something that’s less time consuming and slightly more effective – P2P might be for you. There are many platforms out there that are free to pick through the loans that are listed by prospective borrowers and read their stories and explanations of why they need a loan for and what they’ll do with it.

You should review the prospectus of your chosen P2P lending platform before investing as well as spreading the risk of your investment.

With any investment there is always risk involved, however, many view P2P is an alternative, especially with the current volatility of the markets. Anyone looking to diversify their investment and move away from traditional investment options might want to go down the P2P route.

Interested in P2P? If so, why not take a look at our P2P page where you can view investments and order a free information pack.

Brexit Vote Scares Investors Away From Traditional Asset Classes

Brexit P2P

New research suggests that the UK’s Brexit vote is putting investors off traditional asset classes.

Research revealed that 13 per cent of active investors said they have steered clear of currency markets since the EU vote back in late June, in addition, 10 per cent have avoided government bonds and nine per cent have u-turned from investing in equities.

Leicestershire based P2P lender ThinCats told City A.M. that 30 per cent of investors – from a survey of 2,000, including 500 defined as active investors have been put off traditional asset classes.

However, the research showed that assets such as gold has become more attractive, 14 per cent of investors stated that they have turned to the commodity as an alternative. Moreover, 7 per cent, said they view P2P as more attractive after the Brexit vote.

What P2P and Marketplace lending Industry Needs To Do To Go Mainstream

imgp2p

A lack of transparency is one of the key obstacles for p2p and marketplace lending platforms experiencing considerable growth in scale, according to ThinCats’ John Mould, who believes there are several other hurdles the industry needs to overcome to fit into the mainstream investment universe. (Altfi, September 2016)

It’s fair to say that 2016 has been a challenging year for the industry which has seen high profile scandals as well as seeing slow growth.

ThinCats’ CEO told Altfi that he believes the broader industry should deal with several issues centring on greater transparency in returns, what investors are exposed to and securitisation. Mr. Mould says that many platforms are really asset management firms in disguise and should therefore be regulated as such.

Areas where Mould stresses investors and borrowers need greater transparency is in provision funds, collective pools of cash liquidity that act as a type of insurance for investors.

In the Altfi article he also questions the lack of clarity that is linked to retail and institutional investors. He stresses that the issue is that we are not quite sure how they are both treated fairly. We know in a fund that they all come at the same unit price, he mentions, but he questions on who makes the decision process on the loans?

He again questions the lack of clarity in the last paragraph of the article : “If you’re the regulator you’re saying half of them look like fund managers, half of them look like banks but worse and half of them have these provision funds that we don’t know how they work and half of them just seem to be securitising debt. How does that work?”.

 

 

What Are Your Thoughts?

Which of our chosen P2P stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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Property Still Holds Value Post Brexit

Following the EU referendum vote in late June, there has been a lot of uncertainty in the industry from homeowners, landlords, and housebuilders, all questioning what the future holds for the property market.

Examples such as a £40,000 price reduction in average prices in the capital have set alarm bells ringing.

However, in spite of these uncertainties, some good news is that the regional property market is looking up.

A lot has happened this year, not only with the result to leave Europe, but also in terms of legislation. We’ve seen changes to stamp duty on buy-to-let purchases, as well as changes to rules on multiple occupancy, both of which had an impact on local property markets.

The ramifications of George Osborne’s legislation, as expected, was a significant drop in the number of investors registering to purchase buy-to-let properties.

Moreover, whilst general applicant/buyer registration and property viewings also declined slightly, the number of offers being made were actually up, and sales were also on the up.

Turning our attention to our local area, predicted house price growth in Manchester for 2016-20 stands at 24.6% and rental income for the period is expected to rise by 22.8% (stats taken from MEN)

Examples (which we have recently blogged about) such as Moorfields and Glenbrook’s £40 million residential development and Yo! Homes luxury flats are not only exciting projects, but are are an essential part of the city’s residential strategy to deliver additional, high quality housing.
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So what does this mean for investors?

Firstly, because of the shortage of homes across the length and breadth of the UK, there is little alternative to continuing to invest in residential developments. Doing so will keep the residential property market strong.

In addition, Manchester has been identified as the top city for rental yields. According to LendInvest’s research, the average rental yield in Manchester reached 6.8% between 2010 and 2016.

Research from HSBC, conducted last year, showed that the northern city offered the best yields, with 26% of the population here living within the private rented sector.

Despite the uncertainty of the Brexit vote, the ramifications of leaving the EU could create opportunities for investors, particularly those who are experienced with property investing. Potential property buyers might be put off by the softening of recent house prices, but at the end of the day, they still need somewhere to live, which is great news if you’re a landlord. If property prices do cool – it’s fair to say that investing in property will be very tempting.

So to sum it up, property still holds value post Brexit. Bricks and mortar remain one of the stronger investment choices, as volatility in the stock market means that tangible assets at this moment in time are essential for any investor’s portfolio.

As quite a few commentators have mentioned, a lot of the media focus has been on the ramifications of Brexit vote in London and the South East. However, we strongly believe that the north is a strong alternative with entry prices significantly lower compared with the capital, as well a great place to obtain yields from the likes of student rented accommodation.

In the north we trust!

 
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The Latest P2P News – 18/8/16

P2P News – All The Latest Updates

 

Hi guys and welcome to our August P2P news blog round-up, as usual we will be giving you five of the latest stories from the P2P world. Today we start our round-up by looking at credit card giants Visa and MasterCard who are diving head first into P2P payments to focusing on UK SMEs who are flocking to P2P. Missed our last P2P News round-up? If so, catch up here.

 

Visa and MasterCard dive head first into P2P

Mastercard Visa P2P

A new partnership with Visa and Mastercard will help grow the reach of the clearXchange network, which allows customers at its member banks to make no-fee peer-to-peer (P2P) transfers.

This is for users who have a US-issued debit card, they will be able to use Visa Direct and Mastercard Send respectively to transfer funds in real time from holders of accounts at clearXchange’s member banks, which include Bank of America, JPMorgan Chase, US Bank, and Wells Fargo.

For major credit card networks this is a huge push to go digital. Both credit card titans have been working on their API platforms as well as rebranding their services. The Visa-Mastercard partnership gives clearXchange another string to its bow as it tries to grab digital P2P market share.

These partnerships should open up the world of P2P payments to an entirely new segment of the U.S. population, it can be inferred that it should in turn spur more payments of this type. A U.S. consumer survey revealed that 59% would use P2P payments due to convenience. In addition, 29% of those surveyed said they would use P2P payments for incentives.

 

Samsung Pay takes on PayPal in P2P payment

Samsung P2P

Sticking with payment giants, Samsung is also said to be planning to add a person-to-person, or P2P, transaction function to the mobile payment solution this year and will compete with PayPal’s P2P service Venmo which has gained popularity in The States and Japan respectively.

PayPal recently said the Venmo service saw the amount of transactions processed through the app increase 140 percent on-year to $4 billion in the second quarter. (The Investor, August 2016)

In Samsung’s native South Korea, Kakao, operator of mobile messenger KakaoTalk are spearheading the mobile P2P payment sector.

Commentators have mentioned that no single company is currently leading the mobile payment solution market, the adoption of a P2P function, if deployed, could give a boost to the mobile phone giant in increasing its presence in the market.

 

P2P in China: Why Firms Need Better Risk Controls

China P2P

This is one P2P issue that has had appeared regularly this year and something we have covered in a previous P2P news blog. P2P in China has become a controversial subject due to fraudulent activity taking place which resulted in a number of arrests.

Since 2015, many P2P platforms including Ezubao, the Dada Group, the Kuailu Group, the Zhongjin Group and others have been charged with illegal fundraising, involving tens of billions of yuan. (Wharton, University of Pennsylvania, August 2016)

However, this has not only happened in China, back in May the U.S. Treasury Department released a report criticising the peer-to-peer (P2P) lending business and recommended it be more tightly regulated (like it is here in the UK).

By the end of May this year, China’s P2P industry reached 2.036 trillion yuan (about $300 billion in transaction volumes).

Kaixindai‘s Zhihan Zhou was interviewed by the University of Pennsylvania and mentioned that the challenge for the industry in China goes from small to big. Many P2P platforms start from the lowest end (individual consumption credit) without gradual evolution. This causes trouble subsequently.

He uses U.S. based company Lending Club as an example – It originally hoped to evaluate personal risk based on data extracted from Facebook, Twitter and other social platforms. That is in America, which has much more sophisticated credit investigation and personal data systems than in China. So you can imagine a large amount of P2P business based on personal credit in China will meet trouble in operation if there is no appropriate risk control system in place. (Wharton, University of Pennsylvania, August 2016)

In addition he was asked about why do many P2P companies in China fail, Zhou said it could be linked to expanding too quickly, e.g. their operational capabilities including data accumulation and risk-control models haven’t caught up. He stresses that the industry requires the practitioner to understand both the internet and finance. People from traditional banks tend to stress more on risk control, but less on USX, especially on Internet-user experience. It’s all about balance.

Interested in both P2P and China? Read the full interview here.

 

How Brexit Has Impacted P2P Lending

Brexit crowdfunding

Managing director and founder of Funding Circle, James Meekings recently spoke to Bloomberg about Brexit and P2P Lending.

Bloomberg’s Adam Satariano asked James an array of questions, firstly he asked – “A key part of your business is having access to the European single market, Brexit has caused uncertainties are you thinking of changing your base of operations?”

James mentions that they have various offices in Europe from Berlin to London and have to abide by regulations in every country that they operate in. He also mentioned that the EU referendum doesn’t make a difference to how they behave in different countries.

Another question that was put forward by Mr. Satariano was about Lending Club and how they’ve been going through tumultuous times with its stock collapsing and questions about its internal controls, he asks James how their situation impacts the industry,investors, banks, and hedge funds that they rely on.

James openly admits that is has been a challenging year – from the worries of the Chinese economy, the Lending Club challenges, plus the EU referendum. He says the Lending Club challenges are isolated and are about control issues, in the UK we have a dedicate framework, and for Funding Circle they are seeing institutional investors being more aware and asking more questions about their operational risk framework, which he says is quite right. They have been reassured by the answers that the company has given them.

Watch the full Bloomberg interview here.

 

UK SMEs Flock to P2P Lending Boosting Jobs and Housebuilding

P2P News

The p2p and marketplace lending industry is driving small business and economic growth, particularly in areas hit hardest since the financial crisis, a new report suggests. (Altfi, August 2016)

A report by the Centre for Business and Economics Research (CEBR) revealed that SMEs are increasingly using p2p and marketplace lending platforms to meet their financial needs.

The findings showed that the North East of England was using this particular form of the alternative finance the most. In England, it was the region that was most affected by the 2008 financial crisis.

The CBRE’s research which was produced with Funding Circle, examined loans made through the platform to small businesses since 2010. The results found that lending by p2p platforms in the UK to small businesses rose by 50 per cent from the beginning of 2015 compared to the beginning of 2016. In addition, it claims Funding Circle’s loans have boosted the UK economy by £2.7bn since 2010, supporting 40,000 new jobs and helping small house builders to add 2,200 new homes.

CBRE and Funding Circle’s research also revealed that 61 per cent of borrowers saw their revenue increase as a result of taking a loan, while nearly half of the SMEs reported a rise in profits.

 

What Are Your Thoughts?

Which of our chosen P2P stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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The Latest Crowdfunding News – 10/7/16

The Latest Crowdfunding News

 

Hi guys and welcome to our first crowdfunding news edition for August. As usual we will be taking a look at the latest goings-on in the world of crowdfunding and today we start our round-up by focusing on London’s most exciting crowdfunding campaigns of the summer to looking at why equity crowdfunding matters to small business. Missed our last crowdfunding round-up? If so, catch up here.

 

London’s Most Exciting Crowdfunding Campaigns This Summer

London Property Prices

Turning to the crowd to fund the latest expansion plans or business venture as we know is becoming an increasingly popular option for businesses of all shapes and sizes, and last year crowdfunding in the UK reached £245m.

This year it continues to go from strength to strength with the likes of SyndicateRoom, Seedrs, and Crowdcube dominating alternative investment.

So what campaigns have excited those in the capital? Starting with Revolut, the London fintech launched a crowdfunding campaign last month in order to top up its oversubscribed £7m Series A funding round.

The fintech startup, which allows users to spend cash abroad on a fee-free Mastercard in conjunction with its app, experienced overwhelming demand with a record £12m pledged by interested parties within 10 hours of its launch according to Business site Bdaily.

We briefly mentioned about Crowdcube being a main player when it came to alternative investment, they too got in on the act and aimed at reaching a 5m raise which they exceeded. Crowdcube attracted £6.2 million of investment on its own platform, 124% more than it originally targeted.

Another exciting campaign that we have stumbled across is from Hire Space.

The London startup that has had big client names such as Facebook and Red Bull, closed its 500k crowdfunding campaign back in June. Their funding came from over 200 venues, event professionals and private investors respectively.

According to Bdaily : “Co-founder Edward Poland has some ambitious plans for the firm following the investment drive, with plans to ‘revolutionise the events industry’ both in the UK and abroad as Hire Space entrenches its position at the forefront of the market.”

We will definitely be watching this space (no pun intended!) for more future crowdfunding campaigns in the capital, here are two more from the Bdaily article that might be of interest, view here.

 

Crowdfunding App Tilt Adds P2P features

tilt crowdfunding p2p

We would normally add a P2P based story in our P2P news round-ups (if you missed our last one a fortnight ago you can catch up here), however, we previously mentioned Tilt in a December post and thought we would keep you updated about the app.

For those of you who have never heard of Tilt, in a nutshell the app is for groups of friends to pool money together for a group goals such as fundraising or funding a trip for example.

Tilt is now focusing on P2P features, the platform’s owners have opted to launch a formal P2P transfer function through the addition of “pay” and “request” buttons according to Business Insider.

Their 18-24 user base falls directly into the audience most attuned to digital P2P payments. Mainly because of the social nature of the app itself and many users know each other. This could definitely help the application thrive, because P2P applications benefit from engaged users bringing new users into the mix, who continue to refer additional customers and help expand Tilt’s network.

Image source : Tilt Twitter

Brexit Blamed for Fall in Crowdfunding Deals

Brexit crowdfunding

According to research by Beauhurst, they found out that crowdfunding platforms raised £87.4m in the first half of 2016, a drop of just over 4 per cent from the £91.3m raised in the previous six months. (FT.com, August, 2016)

In addition, their findings concluded that the uncertainty around the vote to leave the EU and the nature of the UK’s relationship with Europe has contributed to having deals being delayed or even abandoned.

UK Crowdfunding Association (UKCFA) spokesman Bruce Davis mentioned in the FT that the dip in deals is just a pause. In addition he stresses that the market has slowed down due to recent events, however, the UK is still taking a large share of the market.

Mr. Davis said that The UKCFA are confident that the number of deals will grow again, he stated in the FT : “The key to that will be strong signals from the government on strategy to see where it wants to see growth and investment.”

 

Dave Goes to Rio Thanks to Crowdfunding

RIO 2016 Crowdfunding

This one is for all you Olympics fans out that there! Dave Leach, a coach at Lewes AC has had a string of successful athletes at the Sussex based athletics club, including Rob Mullett who was selected to Represent Team GB at the Rio Olympics for the Men’s 3000m steeplechase.

Dave’s dream was to travel to Rio with Rob (who he has coached Rob since he was 12 years old), thanks to crowdfunding, Dave’s dream came true!

Club members, friends and colleagues used crowdfunding to raise the money to send Dave to the Brazilian host city; sponsors have kitted Dave and Rob from head to toe in Olympic fashion to be ready for all weather conditions there. In fact the funding was so successful, the target was reached and beaten (the initial target was 3k, however, 5k was raised for Dave).

For a coach who hasn’t been paid for 25 years and has never been on a plane before, this is another example of how crowdfunding has saved the day once again!

Image source : The Telegraph

Why Equity Crowdfunding Matters to Small Business – A View from The U.S.

Equity Crowdfunding USA

For those of you who follow our various blog round-ups know that we look at quite a few viewpoints and stories from all over the world, this time we turn our attention to across the pond.

A series of recent laws and regulations have opened the door to three new vehicles for raising investment dollars for small businesses through equity crowdfunding. These new forms of investment crowdfunding may well transform the nature of small business capital raising in the United States, by enabling individual investors to take equity stakes in new companies as Entrepreneur and Yahoo Finance both explain.

Last September, Title IV on the JOBS Act went into effect modifying regulation A of the Securities Act. In layman’s terms this piece of legislation has a very important meaning – growing companies in The States can now go public in a small offering and raise up to $50,000,000 dollars through a streamlined, low-cost alternative to a full public offering.

Companies can now test the water so to speak, meaning that small companies can let the public know that they are thinking of raising investment dollars. In America this form of announcement has been illegal since the 30’s, however, due to transparency levels and openness that these array of online platforms provide, it has now been made legal.

As a result of the legislation, many small business in America have learned to leverage small early stage investments via crowdfunding to increase their bargaining power and get more money from venture capitalists later as Richard Swart mentions in his article and these new rules give multiple financing options available to small businesses across the country.

 

What Are Your Thoughts?

Which of our chosen crowdfunding stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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Property News Round-up 3/8/16

Property News All The Latest Updates

 

Hi guys and welcome to our first property news blog of the month! As usual, we will be taking a look at the latest goings-on in the UK property market with five short stories. Today, we start our property news round-up by looking at Generation Y and their renting habits to focusing on Aegon’s research on homeowners and pensions. Missed our last round-up? If so, catch up here.

Millennials Like The Flexibility & Freedom of Renting

Millennials Property

Recently, a study confirmed something that most 18 to 30-year-olds already know: they can’t buy houses and also something we are familiar here at The House crowd from conducting our own research. As The Independent’s Thea De Gallier points out : “Millennials are abandoning their dreams of home ownership,” declared a damning report that revealed home ownership in the UK has fallen to 63.8 per cent (for context, it was 70.8 per cent in 2003).”

So why is it so hard for millennials like myself to become a property owner? Firstly, the average house price in this country is just over £200,000, (almost 10 times the average wage!) Secondly other regions are playing catch-up with London’s astronomical prices which has left us no choice but to rent.

But is renting necessarily a bad thing? Today, Generation Y are known for their fast paced life style and are constantly on the move, renting is surely ideal for them.

Research can back this claim up, for example, Deloitte found out that 44 per cent of millennials want to leave their current jobs in the next two years, in addition, Econsultancy found that 69 per cent of all graduates thought freelancing was a more attractive option than long-term employment. (Stats taken from The Independent)

On the other side of the Atlantic, many commentators have mentioned that millennials simply don’t want to own a property. One source in particular views that millennials are “[thinking] differently about what it means to “own” something”.

I totally agree with the commentator as we are currently living in a sharing economy. Moreover, I completely side with De Gallier’s points in her article that we need a similar renting cap that is used in European cities such as Berlin. It’s fair to say the current system isn’t working for us even though some of us like to rent. We definitely need to seek alternatives – the likes of property crowdfunding could be one of those methods, which you can read more about here.

Why Are Fewer People Purchasing Properties in Greater Manchester?

Property News North West

BBC News reported yesterday that home ownership has fallen more sharply in Greater Manchester than anywhere else in England.

The biggest question on everyone’s lips is why? Financial Analyst Louise Cooper says the issue stems from house cost to wage ratios. She told the BBC that : “The average house price in England in 1986 was £38,000, today it is £226,000,” she said. “Over the same period the average salary has gone up two and half times.”

She adds : “The price of property compared to salaries has gone up hugely. Everyone says it is a London problem. It is not. Manchester is one of the worst.”

Our very own Frazer Fearnhead mentions in the BBC article that Manchester has a large student population and young professionals in the city prefer to rent.

Frazer believes that the Greater Manchester area mirrors the rest of the UK in the fact there are not enough houses being built, fuelling a demand that pushes up prices.

Read more on the issue here.

 

Investors Pull £1.4bn From UK Property Funds in Brexit Month

Brexit

Retail investors withdrew £1.4bn from property funds in June, 6 per cent of the sector’s assets, as the Brexit vote sparked an exodus that forced some of the largest funds to halt trading. (FT.com, August, 2016)

Following to the leave the EU in late June, led to many moving money out of property funds which forced Standard Life’s UK Real Estate fund to suspend redemptions in early July.

Others followed suit, such as Aviva, M&G, Columbia Threadneedle, Henderson and Canada Life.

Senior analyst at the retail investment broker Hargreaves Lansdown, Laith Khalaf, told the FT : “The scale of the exodus from investment funds in June is quite extraordinary, with the Brexit vote eclipsing the financial crisis in terms of putting the frighteners on retail investors in the short term.”

At present, around £15bn of investors’ money remains trapped in suspended funds that lack enough liquid assets to meet redemption requests.

 

UK Construction Crashes At Fastest Pace Since Financial Crisis

UK Construction

Construction output in June has fallen at its fastest pace since the dark days of the financial crisis in 2009 according to a survey by Markit and the Chartered Institute of Procurement and Supply (Cips).

Purchasing Managers Index figures indicate that Slower demand has lead to a drop in purchasing activity for the first time in just over three years. The index dropped from 51.2 in May to 46.0 in June, with anything below 50 indicating a contraction, as The Independent’s Ben Chapman reports.

Despite having record house prices, it was revealed that the weakest performing sector was residential construction. In addition, commercial building work was also weak, as new projects did not start to replace those that were coming to completion.

The EU referendum has been linked to the slowdown as there are still many uncertainties. Senior economist at Markit, Tim Moore told The Independent : “Widespread delays to investment decisions and housing market jitters saw the UK construction sector experience its worst month for seven years in June.”

However, David Noble, chief executive officer at Cips mentioned that the only glimmer of light through the brickwork is the rate of decline was not as sharp as that experienced during the previous financial crisis.

A spokesperson for Home Builders Federation said recent figures should not be viewed in isolation and that long term trends for the sector were good.

 

Little Appetite For Using Property As Pension As Research Shows

Property News Landlords

Research conducted by Aegon revealed that majority of homeowners do not want to use their property wealth to fund retirement.

Their study showed 74% of homeowners would only use their home as a “last resort” to provide a retirement income or do not consider their home as a source of retirement income at all. (Professional Adviser, August, 2016)

Moreover, Aegon found out that more than half of the research respondents want to leave their home to their loved ones.

Only 3% of those surveyed said that they would sell their property and move in with family as a means of funding retirement. 21% of homeowners are hoping they can fall back on inheritance to assist them with their retirement plans.

 

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

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Property News Round-up 13/7/16

Property News All The Latest Updates

Hi guys and welcome to our first property news blog of the month, as usual we will be given you a snap shot of the latest goings-on in the domestic market. This week we look at the Manchester property market and how it is still strong after the Brexit vote to ending our round-up and focusing on landlords setting up companies in order to save tax. Slightly behind with what’s going on in the property world? If so, catch up with our last property news blog update.

Manchester Property Market Still Strong Despite Brexit

Property News North West

New development plans in the city are not overheating despite recent news of apartment developments that have been given the green light.

New schemes approved in the last few days include Salford council’s approval for a 35-storey tower and a 17-storey tower at New Bailey Street developed by Trinity Riverside Holdings and a 68-storey tower at Owen Street proposed by Renaker. The landmark development will provide 1,508 apartments and penthouses in four blocks of 39, 46, 52 and 66 storeys. (MEN, July 2016)

Natwest’s Heath Thomas mentioned in MEN that consumer confidence will affect demand for mortgages, but the fundamentals in the city’s residential market are remain sound because there is a structural shortage of homes across the length and breadth of the country.

Addleshaw Goddard’s, Marnix Elsenaar also added his views in the MEN saying Manchester has all of the ingredients it needs to take forward housing delivery, however, it will need to fight with the central government to be able to deliver the right housing products that cater for the city specifically.

He stressed that it is important to ensure central government policies don’t kill off this growing sector.

Read more on this topic here.

 

Chinese Buyers Look Again at U.K. Property

China P2P

Due to the recent drop in the pound, many Chinese property investors have started to look at the U.K. market for potential bargains.

The number of so-called leads from Chinese home-seekers for U.K. properties recently doubled according to Juwai.com, a real-estate website based in Shanghai that allows Chinese buyers to browse residential and commercial properties around the world. Leads indicate that a buyer was interested enough in a property to contact a real-estate agent or developer. (WSJ,June 2016)

Manchester in particular has seen a wealth of Chinese buyers and investors. For example, a recent development at Salford Quays, called the Dock Office, just half the apartments were sold to locals. A quarter went to Chinese nationals.

They are not just buying and investing they are also involved in the construction process.

The Beijing Engineering Construction Group is investing £800m in Manchester’s Airport City, which will include a hub for other Chinese firms to set up. President Xi Jinping saw the site in person when he visited last year. (BBC, April 2016)

Now that Manchester has direct flights to both Beijing and Hong Kong also makes it even more easy for potential investors to visit the city and seek long-term opportunities.

 

Rental Prices Increased in June

Property News Landlords

Rents kept increasing in the three months to June, but there are signs that the growth in the rental market slowed in the first half of 2016 as compared to last year. (City A.M., July 2016)

According to HomeLet, The average renter in the capital now pays £1,575 per month, up 3.9 per cent on last year. For the rest of the country, renters pay an average £773 per month, which is 3.5 per cent higher than last year.

Barbon Insurance Group’s chief executive Martin Totty shared his views in City A.M. stating : The impact of the EU referendum vote will now play out over the months ahead: if as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain marked; all the more so if more people decide to rent while waiting to see what happens to house prices.”

 

How Much Will Your House Be worth in 2030?

Property News - First-time buyer mortgage

The average price of a home in England will be more than £450,000 in 2030, according to research from estate agents eMoov.

Their calculations were based on the 84 per cent increase in house prices during 2000 and 2015 and applied it to the next 15 years.

The map (below) illustrates just how dangerous this current artificial inflation of the market could be in the long run (as eMoov’s Russell Quirk mentions in the Daily Mail), it’s not just London (where typical values of £1.9million could climb to £3.4million in some parts), the issue will spread all over the country.

UK Property Map 2030

Image Source : eMoov/Daily Mail

 

Landlords Expected To Set Up Companies To Save Tax

Crowdfunding News

Landlords are increasingly expected to exploit a loophole in the law that allows them to avoid the Chancellor George Osborne’s hefty, punitive tax raid on rental properties, according to a leading mortgage expert. (Landlord Today, July 2016)

Foundation Home Loans‘ commercial director Simon Bayley told the FT that he predicts to see over 75% of mortgaged buy-to-let acquisitions going through a limited liability company (LLC) structure in the next 12 year or so.

In addition, Mr. Bayley believes that many landlords may consider transferring their existing properties to a LLC.

He goes onto mention that if landlords are using income from a current rental they may require help calculating if the capital outlay is affordable for them, even if the long term benefits suggest to explore the LLC route (also mentioned in Landlord Today).

Mortgage Concepts Associates director Mike Richards agrees with Bayley’s insights, his view is that gradually most lenders who are in the sector will offer this (the 75% or more projection) and premium lenders that are charged for limited company mortgages of around 0.5% will ultimately vanish.

Moreover, he reckons that you will still get a percentage of people who will mistrust the limited company route, but in reality, this is really the only way to go for the future of the buy-to-let market in the UK.

 

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information

Property News Round-up 8/6/16

Property News All The Latest Updates

 

Hi guys and welcome to another property news round-up this week we start off by focusing on the EU referendum and look at whether house prices will go down if we have a Brexit vote. We end our round-up in France for the Euros and take a look at the winners and losers of the tournament if it was based on property. Missed our last property news round-up? If so, catch up here.

 

Will Property Prices Go Down If There’s Brexit?

Property News Brexit

With less than three weeks to go until we cast our votes at our local polling stations on whether we should leave or stay in the European Union, one question that stands out in the property industry is whether property prices will go down if we leave.

So will it? Well, not exactly. Recent stats from National Statistics indicate that house prices are still rising fast. They increased at a rate of 9 per cent a year in the year to March 2016.Prices are predicted to increase by roughly a further 10 per cent by the end of 2018.

In addition the treasury have mentioned that the Brexit would bring about an increase in the general cost of borrowing across the economy. This, in turn, would crush demand for housing and lead to fewer transactions. (The Independent, June 2016). This would therefore have a negative effect on price growth. Some analysts have even said that leaving the EU would also have a negative effect on foreign investment – this causes problems for the top end of property investments in London and the ramifications would lead to reduced investments.

But we all want cheaper homes right? Some have argued that we should welcome lower prices because that will help make homes more affordable, especially for first time buyers. Pro-Brexit Tory Lead of the House of Commons Chris Grayling, has tried to expand on this topic, and mentioned that staying in Europe will make it even harder for young people to buy a house due to immigration from the Continent which, he claims, is driving up domestic demand for housing (as mentioned in a recent article by The Independent).

 

London Property : Prices Rise 432% In Two Decades

Property News London Property

Property prices per square metre have risen by 432 per cent in Greater London over the past two decades. This compares to a national average increase of 251 per cent, or £2,216 per square mile according to data that was conducted by Halifax.

In addition, Land Registry data indicates Greater London has gone past the £600,000 milestone for the first time.

Moreover, property investment firm London Central Portfolio [LCP] have said that this new London average price (£600,076 to be precise) is 14 per cent higher than a year ago. This has been linked to low mortgage rates and the falling cost of stamp duty on properties costing less than £937,000.

 

Survey Claims Student BTL Investment Due For Major Expansion

Property News - HMO

Research from Mistoria Group found that one in 10 student property landlords say their HMOs enable them to offset the new tax rules and remain profitable, while a further 50 per cent do not believe any other asset class offers the same yields and return on investment as student property. (Letting Agent Today, June 2016)

The Mistoria Group’s report which was based on a survey of 500 landlords last month – reveals that 35 per cent of student landlords purchased HMO properties in the first quarter of this year to beat the new stamp duty rise, moreover, a further 43 per cent of landlords plan to acquire between two and three new student properties in the next 18 months.

Student accommodation has been the strongest growing investment property market in the UK and the north west has attracted many investors. For example, a HMO that houses four students, can be purchased for just £160,000.

Want know more about HMOs? Check out our handy infographic.

 

The North-West Has UK’s Highest Property Yields

Property News North West

According to research from LendInvest, the north-west of England produces the best average rental yields over the past five years. In addition, it is estimated that investors could achieve yields some 200% higher with property outside of the capital.

Manchester and Liverpool were top with regards to yields, Manchester producing yields of 6.02% whilst Liverpool saw yields of 5.15% respectively.

Manchester has Europe’s largest student population and a graduation retention rate of 58%, demand for rental accommodation within the northern city continues to outpace supply and continues to attract a wealth of investors.

Interested in the Northern Powerhouse city? Check out our Manchester guides for more info, (North and Central).

 

Euro 16 : Winners & Losers Of The Property Championship

Property News - Euro 16

Property prices have changed a lot since the last the Euros in Poland and Ukraine.

Just like the property market in England, in Europe there is also a north-south divide.

Turkey, Iceland, Sweden, and Ireland had the biggest rises, though not all for the same reasons.

The Turks win the property championship with a 65.6% increase, Istanbul has helped The Crescent Stars in the tournament as there is burgeoning young population who are new to housing investment and eager to buy in the city that stretches across two continents.

Other successful nations such as the Republic of Ireland, benefited from a booming economy, with GDP expanding 7.8% in 2015 thanks to huge capital investments from abroad. Moving further north, Iceland has enjoyed a nice recovery since the 2008 financial crisis, with demand for high-end properties since 2013.

The Swede’s property boom was down to negative interest rates, many in the Scandinavian country are concerned that high household debt and low-interest rates could lead to a crash.

The home nations also saw property prices increase. As mentioned previously about London property, The average house price in the capital passed £600,000 mark.

Host nation France and one of the favourites to win the tournament, has experienced negative property price growth between 2012 and 2016. This could be inferred to a decrease in household income and stricter mortgage conditions.

See how other European countries did at the Euro 16 property championship below.

Property News Euro 16 Property

Image Source : Yahoo

 

What Are Your Thoughts?

Which of our chosen property stories has interested you the most? We would love to hear from you, feel free to leave us a comment on our Facebook and Google Plus pages. If you prefer to tweet us, tweet @TheHouseCrowd.

In the meantime if you want to know more about Property Crowdfunding do register for our Information Pack which will tell you all about it. 

Register Now For More Information