Please select your market of interest

UK Market

Maslow Capital London Update: November 2017

The headlines from Nationwide, which claimed house prices in London had fallen -0.6% y/y in October, should be viewed within a wider context. London is comprised of 33 different boroughs and house price growth would have varied greatly across them.

Although the Land Registry data lags behind the market, it can still be used to view the stark differences in performance across London, and to highlight why we shouldn’t have a knee-jerk reaction to headlines stating a -0.6% fall in London house prices.

The latest data to end September 2017 showed a marked difference in recent house price growth across the 33 boroughs, with some performing well and others seeing a correction. The largest falls in price remained contained within the prime central boroughs of the City of Westminster, City of London, Kensington and Chelsea.

London House Price Growth: 3-months to September 2017

Source: HM Land Registry

House prices in the 3-months to September 2017 also fell in Bromley, Barnet, Brent, Enfield, Lambeth and Hammersmith and Fulham. However, in several boroughs, house price growth was strong, including Hackney, Camden, Lewisham, and Redbridge.

And whilst the deterioration in house prices picked up pace in September 2017 in some of the areas mentioned above, in boroughs such as Lewisham, Redbridge, Haringey and Croydon, the data suggests price growth accelerated in that same period.

The correction in prices have been driven on the most part by the political uncertainty from the fallout of the EU referendum. The complexity of Brexit has become increasingly apparent. This has been combined with increases in stamp duty, and now concerns about further interest rate rises which has further lowered the consumers appetite for borrowing, and this has been felt across the capital.

London House Price Growth: 3-months to September 2017 and August 2017

Source: HM Land Registry

The chart below shows the rolling 12-month house price growth in the 3-main prime central areas of London and inner and outer London. Kensington and Chelsea, City of Westminster, and the City of London all continued to see a deterioration in values in September however, the falls in the City of London were much smaller than in previous months. The recent adjustment in the City of London could have signalled the start of a much wider London correction. The chart highlights that back in late 2007, the City of London started to record a price correction before the rest of London, which subsequently followed a few months later.

Rolling 12-month growth London house prices, %

Source: HM Land Registry

Meanwhile transaction volumes remain weak across the whole of London, with the September dataset showing little improvement in activity. Brexit and poor consumer appetite for debt continue to hold back activity.

London change in transaction activity: 3 months to July 2017 vs 3 months to July 2016

Source: HM Land Registry

The key trends impacting London house prices

  • Whilst new instructions have been falling across the country, London new instructions reportedly increased during 4 of the last 6 months with “a relatively smart pick-up cited in both July and August” (Source: RICS UK Residential Market Survey). However, London new buyer enquiries remain weak.
  • Steep stamp duty charges continue to have an impact on transactions at the top end of the market.
  • Changes in rules for mortgage lenders to buy-to-let investors with more than 4 properties will find it hard to raise finance
  • International buyers are still attracted to the London market and this has been boosted by depreciation of sterling. Savills have reported that the high-end market will bounce back once the uncertainty of Brexit has settled.
  • Help-to-buy continues to play an important role in London. Since Q2 2013 8,813 properties have been bought in London under the Help to Buy: Equity Loan scheme (source: DCLG). The announced extension of this scheme should have a positive impact in London.
  • In the year to end-June 2017, 518 planning permissions had been granted for major residential schemes in London. This was an 18.3% increase from the year to June 2016 (source: DCLG).
  • However, according to the DCLG housebuilding statistics, only 16,620 new dwellings have started in London in year to June 2017 which is the lowest number of starts over a 12-month period since 2012. (in the 12-months to June 2016, there were 20,860 new starts)

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

Will they, won’t they? What to expect (or not) in the Autumn Budget

The Autumn Budget is almost upon us and, we have been mulling over what important changes we expect the Chancellor to make.

We anticipate that there will be a change to the way Stamp Duty is structured: the publication of Theresa May’s White Paper earlier in the year identified a broken housing market, and coupled with this and the slowdown nationally in transaction volumes off the back of political and economic uncertainty, change to stamp duty would be a logical next step to fix this.

What we think is unlikely, but not off the table completely, is that there will be any big adjustment at the top end of the market, in the +£1 million category. A small reduction in the charges at the prime end could have a big impact on liquidity, however this is probably not where the Chancellor will be focussed.

A more plausible scenario is another stamp duty holiday for first time buyers, similar to that between 2010 and 2012, when properties below £250,000 were exempt from stamp duty. A move like this is unlikely to have much impact in London where average property prices are £483,568, according to HM Land Registry, but could help improve liquidity in the rest of the UK.  A stamp duty holiday together with the continuation of Help to Buy, will benefit this important part of the housing sector.

There have also been calls for the Government to remove stamp duty entirely for older homeowners, to encourage people to downsize. It’s hard to see how this could be implemented but supporters say this would help increase the supply of family sized homes. A guise of this in conjunction with further stimulus for increasing housing supply, rather than just supporting demand, may be at the forefront of the Budget. For example, the government could give corporate tax reductions to encourage developers to deliver new housing in certain areas where there is a particular supply and demand imbalance.

Lastly, in a bid to win back some popularity amongst the younger generations, we anticipate a probable shake-up of student loans, something that would help support the student sector.

Watch this space…

Maslow Capital’s Lending Portfolio Update

Maslow Capital

NEWS: Maslow Capital strengthens team with seven new appointments

Maslow expands its team to support current and future growth

The new hires add depth across origination, risk, marketing and operations, providing the necessary resources to grow the business whilst delivering exceptional service standards to developers.

Kevin Manners

Has been appointed as Finance Director and will take responsibility for operations, cash flow management and servicing.  After qualifying as a Chartered Accountant in 2008, Kevin moved into the civil engineering sector joining a private equity-backed construction firm. He then joined McLaren Automotive as it embarked on its journey from start up to becoming an established manufacturer of sports and super cars.  He held a number of positions in the UK banking sector prior to joining Maslow.

Andrew Pinfield

Joins Maslow as Head of Risk to add further strength to the company’s underwriting and portfolio management capabilities.  He brings to Maslow more than 25 years of banking experience, following successful tenures in property finance, risk, analytics and portfolio management, holding senior positions at RBS, Citi, HSBC and NatWest.

Michael Kearney

Forms part of Maslow’s origination team after more than a decade as an analyst and a portfolio manager with ANZ Banking Group in Australia, where he oversaw the growth of a A$1.4 billion national loan portfolio of real estate investments and development facilities.

Thomas Ahearne

Joins Maslow as a Deal Analyst from United Trust Bank, where he specialised in property development, before broadening his experience as an analyst within the structured finance group.  Tom successfully contributed to the rapid growth of the structured finance desk, with a portfolio now valued in excess of £100 million.

Wojciech Chrobak

Joins Maslow as a Finance Analyst from State Street Bank, where he was a manager in the performance and analytics team. Previous to that, Wojciech spent four years at Lionsgate Asset Management – a fund of hedge funds – where he worked on a number of projects in finance, client reporting and due diligence before moving to the research team.

Karen Brown

Joins Maslow as a consultant having previously worked at the London Stock Exchange Group. Karen brings more than a decade’s experience in developing and implementing a broad range of specialist systems for the financial services sector.  Karen was responsible for optimising LSE Group’s London and Paris multichannel platforms and she will support Maslow’s growth ambitions by enhancing system automation.

Gayleen Huggins

Has been appointed as Maslow’s marketing manager, overseeing the company’s external communications, marketing and advertising activity.  Gayleen previously worked with MYJAR, an innovative fintech lending firm and for various property start-up brands founded by The Richmond Group.

Today’s appointments underline the long-term potential seen in the alternative lending sector.  The experience that these new colleagues bring to Maslow is significant and will help accelerate new originations, improve service and add operational capacity to handle the growth in lending activities.

Maslow Capital has to date enabled developers to realise projects with a collective GDV in excess of £1.2 billion, covering more than 2,300 new properties spanning 2.3 million sq. ft of new accommodation throughout England and Wales.  Maslow has partnered with TPG Sixth Street Partners, part of TPG, global investment business with $73 billion of assets under management.

Contact details for the team can be found on the team page.