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Property Investment North And South Divide

Successful buy to let property investment can often depend on location – North, South, or the Midlands.

The latest research from peer to peer lending platform, Sourced Capital, has looked at where’s best to invest in bricks and mortar across the north, south and midlands regions of Britain.

Location can be vital when investing in property and regional influences can make the difference between profit and loss, so Sourced Capital has dissected the market based on the value of a property and the total value sold, as well as demand for these properties based on the volume of transactions.

The North-South divide is a very contentious issue but with the Midlands becoming a property powerhouse in its own right over the last few years, Sourced Capital totted up the totals based on: –

  • The North including the North West, North East, Yorkshire and the Humber and Scotland.
  • The South including the East of England, London, the South East and South West.
  • The Midlands including the East and West Midlands and Wales.

The figures show that despite much talk of the Northern Powerhouse, the South remains in pole position where the property market is concerned. In the last 12 months, house prices across the South have averaged £335,567 with £132.7 billion worth of property sold across 401,606 transactions.

The North doesn’t trail by much when it comes to the churn of property sales though, with 333,262 transactions over the last month, although the value of these properties is significantly lower with the average property going for £152,276 with a total value of £52.1 billion.

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The Midlands and Wales accounted for the lowest level of transactions at 203,586 and while total value also trailed at just £38,4 billion, the average house price does exceed that of the North at £185,241.

Stephen Moss, founder and MD of Sourced Capital, commented: ‘When it comes to the sheer volume of transactions and the value of bricks and mortar, the South continues to lead the way and while this is largely driven by London, each region provides an attractive proposition when it comes to investing from both a demand and value point of view.

‘However, the North isn’t far behind when it comes to demand for housing and with the exception of the North East, it’s fair to say the property market across the majority of the North and even parts of the Midlands can go toe to toe with the South on transaction volume.’

Source: Residential Landlord

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Leeds launches 10-year mortgages

Leeds Building Society has set its lowest-ever rates on a new range of 10-year fixed rate mortgages for both the residential and buy-to-let markets.

A 10-year fixed rate mortgage for residential applications is being launched with a rate of 2.08 per cent, available up to 65 per cent loan to value.

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Meanwhile, two 10-year fixed rate products for BTL applications will also be available at rates of 2.44 per cent and 3.19 per cent, up to 60 per cent LTV and 70 per cent LTV, respectively.

Matt Bartle, Leeds Building Society’s director of products, said: “In these uncertain times, our new products will provide reassurance for those looking for a bit of longer-term security.”

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According to Mr Bartle, although not all buyers would want to take up a long-term mortgage product, this would suit some people for whom a decade’s worth of interest rate security is important for their needs.

Martin Stewart, founder of London Money, commented: “I think if the coronavirus carries on rampaging across the world we will soon see global base rates at zero or even negative.

“In the old days, variable rates were for the brave; it may now be the opposite is true and that long-term fixed rates are for the brave instead.”

By Simoney Kyriakou

Source: FT Adviser

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Budget provides massive boost in construction and infrastructure spending

In his first budget, Chancellor Rishi Sunak announced a £30bn stimulus for the UK economy with a total spend of £175bn over the duration of this Parliament on infrastructure alone.

His opening budget comments rightly focussed on government measures to tackle the problems caused by the coronavirus outbreak. Small and medium sized businesses could be refunded for sick pay for up to two weeks per employee and will also be able to access business interruption loans of up to £1.2m.

There were a lot of announcements for specific projects, in the budget document if not in the actual statement, which will provide a welcome boost to the entire construction industry. These include £12bn for affordable homes plus £10.9bn on other housing stimulus, with an aim to build 1 million homes over five years, £1bn to cover the costs of removing high-rise cladding, 40 new hospitals, a total of £5.2bn on flood defences over six years, £1.5bn to refurbish schools and colleges and £27bn on roads.

There was a commitment to provide £640m for tree planting with an ambition to plant 30,000 hectares annually by 2025. The use of ‘red diesel’ (diesel which attracts a lower level of duty than that used for transport) will continue to be allowed in the agriculture and forestry sectors but no longer permitted for construction firms.

The government also promised to look again at the function of the Apprenticeship Levy and how improvements can be made to support businesses. It also promised to provide adequate funding to continue the apprenticeship schemes through to 2021 even with the expected rise in numbers of apprentices.

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We contacted several industry figures for their reactions:

On the introduction of a building safety fund…

“We welcome the government’s commitment to a £1bn building safety fund which will allow urgent work to be undertaken to make the UK’s housing safer. However, in order to safeguard millions of people, funding must also include provision for the replacement of fire doors as well as cladding removal,” said Helen Hewitt, CEO of the British Woodworking Federation.

On homebuilding and infrastructure stimulus packages…

“Levelling-up the country isn’t about what is said at the dispatch box, but the £600bn to be spent on new infrastructure stands to transform all parts of this country,” said Hew Edgar, head of RICS UK Government Relations & City Strategy.

“Delivering green, new housing required an ambitious approach to VAT – not superficial tweaks to stamp duty – so we’re disappointed the Chancellor didn’t support the property industry to retrofit thousands of buildings, turning them into places people would have loved to call home.” Mr Edgar added.

“An important boost to UK housebuilding, and presents a number of opportunities for the woodworking and joinery manufacturing sector which produces integral components including windows, doors and staircases. Using timber construction products the UK has an opportunity to become a sustainable construction global leader in the post-Brexit economy,” said Mrs Hewitt.

“Confirming 70,000 new homes, extending the Affordable Homes Programme and supporting local authorities build more affordable homes are all great strides forward. We also look forward to the planning reforms to help accelerate housebuilding. Our members are ideally placed to help deliver cost-effective, high-quality housing that is making a significant contribution towards reducing climate change.” said Nick Boulton, chief executive of the Trussed Rafter Association.

“I am disappointed not to hear more from Mr Sunak about investing in new buildings and existing properties to decarbonise homes on the road to a net zero carbon economy,” said John Newcomb, chief executive of the Builders Merchants Federation “Household energy-efficiency was noticeable by its absence, both from his speech, and from the Budget Red Book.”

On initiatives to tackle climate change…

“With major investment announcements this has to be a good budget for the construction sector,” said Andrew Carpenter, chief executive, Structural Timer Association. “I particularly welcome the investment outlined in the climate commitments – reducing carbon emissions to mitigate the climate crisis has to be a global priority.

“The commitment to an Infrastructure Fund to support Carbon Capture and Storage (CCS) is an interesting one – for years those operating in the structural timber sector have been promoting the benefits of carbon sequestration through the use of engineered timber systems in construction and now the Government have finally acknowledged the importance of CCS.”

On the £1.5bn funding boost to improve the condition of further education colleges…

“Our members look forward to contributing to the refurbishment of further education buildings and, as with housebuilding, there is a major opportunity for the UK to lead the way in the use of sustainable building products including timber,” said Mrs Hewitt.

“The investment in further education will also provide a boost to building provision in certain skilled trades, and support vital education and apprenticeship programmes that help develop the skills that are so vitally needed in the woodworking sector. We look forward to engaging in the National Skills Fund consultation in the spring, to help the Government and our industry tackle the ongoing skills shortage within the construction industry.” Mrs Hewitt added.

On the £640m forestry funding…

“I’m delighted to see the Government confirm it is putting £640 million behind its tree planting target – the biggest injection of forestry funding for a generation,” said Stuart Goodall, CEO of Confor.

“We welcome the ambition to plant 30,000 hectares (75,000 acres) of new woodland annually by 2025 – exactly the same target Confor set last year. The industry will wait with interest to see more details of how we get trees in the ground and start making a real difference . . . we need to see ambition matched by action.”

Source: TTJ Online

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RICS reports rising demand prior to coronavirus

The RICS UK Residential Market Survey found that demand, sales and instructions all rose in February – before the threat of coronavirus likely put the brakes on activity.

Some 22% more contributors saw an increase in sales compared to a fall in February, with activity rising in every region barring Scotland.

Some 20% more contributors saw an increase in enquiries than a fall in February, the third consecutive month demand rose. Meanwhile a net 15% saw an increase in instructions.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The usually reliable RICS survey suggests that house-price inflation, demand and new listings have been increasing for the past few months, which is good news, even though it is based largely on pre-virus responses.

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“It confirms what many of our buyers and sellers are telling us – that the impact will be serious but short term. Our viewings are about 25% lower than we might have expected at this time of year but sales are not being cancelled so far and we have even seen exchanges of contract immediately post-Budget.”

Nigel Purves, chief operating officer, Wayhome said: “This uptick in activity may be welcomed by those looking to sell, but it doesn’t change the fact that house prices remain too high for many.

“With the Chancellor Budget doing little more to help aspiring homeowners get onto the ladder, people are keen to see new pathways toward homeownership.

“While any support from the government to tackle supply and demand is, of course, to be welcomed – the reality is we need to see real, genuine innovation in the market to make owning a home more achievable.”


Source: Property Wire

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Record year for residential land and investment transactions signals boom for Birmingham

The Midlands’ residential development market is shedding its “emerging hub” status as it continues to mature at pace, according to the Birmingham Report.

Knight Frank has announced that 2019 was a record year for its residential land and capital markets teams operating in the region, with £289m transacted across the year – the highest volume ever transacted by the firm in a single year.

Rising employment opportunities and a growing population continue to drive the city’s new homes and rental markets, and has prompted a number of major housebuilders to seek to increase their exposure in the city.

“Momentum is certainly building, and Birmingham and the wider region is no longer an emerging hub – it’s an established location in its own right,” said Mark Evans, head of regional residential development at Knight Frank.

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“We’re seeing increasing levels of interest from overseas investors as well as domestic buyers. This positive sentiment is creating an increased appetite from developers to not only acquire good quality land, but an urgency to launch their existing schemes to market to meet demand.”

In total, some 4,187 additional dwellings were delivered in 2018-19 in Birmingham up from 3,160 the previous year, representing a 33% rise – the highest in over 15 years. But a further 2,500 homes a year are still needed in Birmingham to help meet demand and clear the backlog.

As the UK’s second-largest business hub, Birmingham has benefited from a fast-growing local economy as well as large-scale city centre regeneration, which is helping to fuel population growth. Coupled with this is Birmingham’s relative affordability compared to other areas of the UK, especially in the south of England, making it the UK’s most popular city for London leavers, ahead of Brighton, Bristol and Manchester.

Oliver Knight, residential research associate at Knight Frank, added: “The overall development picture in Birmingham has changed substantially over the past few years. The new-build market is maturing, evidenced by the emergence of some of the major housebuilders in the city for the first time. Sales volumes have also been robust, despite the increased political uncertainty last year, which suggests that well-located and high-specification schemes will continue to perform strongly in 2020 – especially given the clarity afforded by December’s General Election result.”

Evidence of an uptick in interest from developers and housebuilders for land is noticeable in Knight Frank’s record year for transaction volumes in 2019.

Across the firm’s Birmingham and Stratford offices, which together cover the East and West Midlands, the team closed 27 land deals in 2019, with a combined value of £172m. Together, these sites have the capacity to deliver almost 4,000 new plots in the region.

During the same period, the region’s residential valuation team advised banks, developers, housing associations and property investors on over £1bn of residential assets and development opportunities – including in-fill housing sites, urban regeneration proposals, high density city centre developments and a range rental investments.

Knight Frank’s country homes and new homes teams operating in the region were also busy in 2018-19, with £115.3m of sales and reservations reported across 316 properties.

Investors, too, are keen to enter into the region’s fast-growing property market. Knight Frank’s Birmingham residential capital markets team closed nine major tenanted and regional BTR funding deals in 2019, resulting in over £245m of capital to flow into the region.

Evans said: “The clarity afforded by a Conservative majority in the General Election has removed some of the uncertainty that was weighing on the UK’s residential property market, and has paved the way for a release of pent up demand. With a commitment from Boris Johnson on HS2, and major development taking place in and around Birmingham, we expect to see demand and pricing continue on this already very positive trajectory over the next five years.”

Knight Frank forecasts that residential property prices in the West Midlands will rise by 13% over the next five years, with rental growth expected to mirror this, rising by 10% over the same time frame.

By Rachel Covill

Source: The Business Desk

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BoE: Outstanding value of residential mortgage loans up 3.8%

The outstanding value of all residential mortgage loans was £1.499bn at the end of 2019, which is a year-on-year increase of 3.8% according to the latest Bank of England Mortgage Lenders and Administrators Statistics.

The value of gross mortgage advances was £73.4bn which remains broadly unchanged in comparison to Q4 2018.

New mortgage commitments, or lending agreed to be advanced in the coming months, was 4% higher than in 2018 at £70.6bn.

The share of mortgages advanced in Q4 2019 with LTV ratios exceeding 90% reached 5.7%, which is a rise on figures recorded the year previously.

The share of gross mortgage lending for buy-to-let purposes was 12.4%.

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The value of outstanding balances with ‘some’ arrears fell by 2.1% over the quarter to £13.4bn, and now accounts for 0.89% of outstanding mortgage balances.

Mark Pilling, corporate sales managing director at Spicerhaart, said: “The Q4 arrears figures from the Bank of England are broadly positive, showing another fall on the back of previous quarters.

“There was also a small drop in high LTV mortgages and high loan-to-income ratios – although single-income borrowers with an LTI ratio above four actually rose slightly, which could be a cause for concern.

“With the coronavirus Covid-19 already beginning to cause real disruption to businesses and people’s livelihoods, it remains important that lenders have a flexible attitude and continue to seek outcomes that are right for customers.

“There is a strong likelihood that arrears will rise as a result of the virus, and the measures imposed to slow down its spread.

“Lenders need to be ready for a situation where people are facing real financial difficulties through no fault of their own.”

By Jessica Nangle

Source: Mortgage Introducer

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Banks offer mortgage repayment holidays due to coronavirus

High street banks RBS, NatWest, TSB, Virgin Money and Santander will allow those affected by coronavirus to defer mortgage and loan repayments.

RBS and NatWest will allow customers affected by coronavirus to defer payments by up to three months, with TSB offering a repayment holiday of two months.

There is some ambiguity as to how customers have to be ‘affected’ by the virus to benefit from these special measures – payment holidays are being considered on a case-by-case basis.

A spokesperson from RBS and NatWest, said: “We are monitoring the potential impact of coronavirus across all our customers to ensure we can support them appropriately through any period of disruption.

“We understand that there may be circumstances where a personal customer may fall into financial difficulty as a result of the impacts of coronavirus, for instance, loss of income.

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“We will look to understand each customer’s situation on a case-by-case basis and can offer a number of options to help them manage their finances. We would encourage any customer experiencing financial difficulty to get in touch with us.”

Virgin Money will also consider offering relief on a case-by-case basis.

Meanwhile Santander is offering support to customers, which can include deferring or reducing repayments.

A Santander spokeswoman said: “Santander has a team of experts on hand to support customers who have been impacted by the coronavirus. Anyone who has been affected can talk to us on 0800 9 123 123.”

In other measures, Lloyds Banking Group is offering £2bn of new funding to small firms with no fees.

Meanwhile Barclays is contacting business customers affected by the virus, offering them 12-month capital repayment holidays on loans of more than £25,000.

Barclays said in a statement: “Any customers suffering hardship as a result of Covid-19 can contact our specialist support colleagues if they are experiencing problems making repayments to their mortgage, overdraft, personal loans or credit cards.

“These customers can also access their fixed savings accounts early without paying any penalty charges.”

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “Mortgage lenders don’t live under a rock. They know that coronavirus is causing severe uncertainty.

“They’re also aware that as a result of the outbreak, some customers might be unable to make their monthly mortgage repayments. Following Italy’s nationwide lockdown to contain the spread of the virus, payments on mortgages are to be suspended across the country.

“In the UK, we’ve already seen a number of lenders offering customers payment holidays on their mortgages and other loans if coronavirus means they face difficulties paying because of loss of work.

“Borrowers who are worried about coronavirus and what it might mean for their mortgage should get in touch with their lender as soon as possible to discuss their options.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders are reasonably sympathetic to any illness that affects a borrower’s ability to pay their mortgage, whether it’s coronavirus or something else.

“They may ask for evidence that you are unwell but the message to borrowers, particularly the self-employed who are most likely to be affected in terms of their income, is that anytime you are struggling to pay your mortgage, get in touch with your lender. Don’t bury your head in the sand and hope the problem will go away – it won’t.

“If you find yourself struggling, make a proposal to your lender – you might not be able to afford to pay all your mortgage, for example, but you could offer to pay half. The important thing is to ask for help as early as possible rather than ignoring the issue. While lenders should offer support to borrowers, they can only do that if they know there is a problem.

“Keep a note of any conversations or correspondence you have with the lender about a payment holiday, as if is not marked down correctly and is noted as arrears, there could be an issue when you come to remortgage in two or three years’ time. But if it is marked correctly, it shouldn’t harm your credit rating.

“Lenders aren’t under any obligation to give you a payment holiday and if you are a habitual late payer of your mortgage, they are less likely to be supportive. However, even if you are in this situation you should talk to your lender and see what can be done.”


Source: Property Wire

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Midlands Buy To Let Investors Most Likely To Expand

Buy let property investors in the Midlands are most likely to expand their property portfolios this year, according to research by specialist buy to let lender Paragon.

Overall, Paragon’s buy to let survey found that just 14 per cent of landlords in England and Wales are currently looking to expand their portfolios, with those in the Midlands most likely to buy an extra property.

Almost one in four (24 per cent) of landlords in the East Midlands plan to buy further investment properties this year, closely followed by 22 per cent of landlords in the West Midlands.

This compares to landlords in Wales, London Central, and the South West, where just 10 per cent, 9 per cent, and 8 per cent of landlords respectively intend to buy.

More than half (52 per cent) of those looking to invest further said they were targeting terraced properties. One in four, meanwhile, said they would look to buy a house in multiple occupation (HMO).

Semi-detached houses were being targeted by 32 per cent, while 26 per cent were looking to purchase flats for investment.

In addition to the popularity of the midlands, the research also showed that professional landlords with larger portfolios are more likely to invest further.

Just 8 per cent of landlords with one property are looking to invest, compared with 20 per cent of large portfolio landlords with 20 properties or more.

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Of landlords with 2-3 existing properties 12 per cent are looking to expand, while 15 per cent of those with 4-5 properties are looking to buy further. 14 per cent of investors with 6-19 properties intend to purchase.

Paragon’s data shows nearly two-thirds of landlords plan to fund their next purchase with a buy to let mortgage

Richard Rowntree of Paragon commented: ‘Portfolio landlords have adopted a number of strategies to adapt to the tax and regulatory changes of recent years.

‘We’re seeing trends such as these landlords buying stock from smaller-scale participants as they exit the market or targeting higher-yielding properties such as HMOs.’

Source: Residential Landlord

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Halifax: House prices up 2.8% annually

House prices increased by 2.8% in the year to February, according to Halifax’s house price index.

On a monthly basis, house prices increased by 0.3%.

Looking at the data on a quarterly basis, house prices rose by 2.9%.

Russell Galley, managing director, Halifax, said: “The UK housing market has remained steady heading into early spring.

“Much like we saw in January, the increases seen in February reflect the continued improvement of key market indicators.

“The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand.

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“Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy, and we wait to see how these will affect housing market sentiment later in the year.”

Ben Johnston, director of off-market property app Houso, added: “House prices are on a continued upwards trajectory, but it remains to be seen how much of an impact the unexpected hurdle of Coronavirus is going to have on the market.

“The Bank of England could feasibly follow the Federal Reserve with a rate cut to help markets and shore up the stagnating economy in an effort to prevent other businesses going the way of FlyBe.

“Next week’s Budget gives the government the chance to stimulate growth further by reducing stamp duty although this might not be enough until the Coronavirus has stabilised and the threat has diminished.

“That all-too-precious confidence, which is so important for the market, is hanging in the balance.”

Lucy Pendleton, founder director, James Pendleton, said: “It’s no surprise to see continued healthy price growth like this. Demand and supply have both been rebounding recently but, so far, the number of new buyers is definitely outpacing the return of sellers.

“Coronavirus impacted our business for the first time on Wednesday, stealing away a sale that was just days from exchanging.

“The buyer worked in the events industry which is being rocked by large numbers of cancellations. He was unfortunately one of the employees told his job was at risk, forcing him to pull out of the purchase completely. The hope is this will remain an isolated case, but the impact of the virus will become clearer in March.

“For now, with valuations still rising and competition for certain properties still fierce, buyers have begun to put in offers on multiple properties in a bid to secure an option before stalling over exchange of contracts in case something better comes along. This could create an unappealing log jam and put more completions at risk if Covid-19 starts to become a major factor.

“Despite the newspaper and TV screens being peppered with images of people wearing face masks and plastic bottles on their heads, there’s still a huge appetite to move, and buyers and vendors have so far refused to put their searches on hold.”

By Jake Carter

Source: Mortgage Introducer

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What can the property industry expect from this week’s Budget?

In its 2019 election manifesto, the Conservative Party committed to a fundamental review of the business rates system.

With the party having gained a majority in government, we should expect more details of this review to be announced in the Budget. Any review will have to consider real alternatives to the current regime and a land value tax system has been rumoured as a possible replacement.

A move to a land value tax would certainly be a fundamental step and would raise several key questions for commercial real estate, including who would ultimately bear the cost. What would the implications be on commercial rents if rates were stripped from the occupancy cost and what might the impact be on property investment values? There would also have to be detailed consideration given to how a land value tax would be set and administered as a direct rates replacement and its interaction with agricultural land, which is currently exempt, and residential land, where council tax is currently applied.

Due to the complexities and challenges with such a significant move, any potential change would likely be seen in the long-term. As a result, some additional short-term rates relief measures are expected to be included in the Budget. These are likely to be aimed at ameliorating the high-street bloodbath and levelling the playing field upon which online and bricks-and-mortar retailers compete.

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With the UK’s housing crisis posing a problem for the government that won’t go away, we will no doubt see more measures announced on residential property. Successive governments have put headlines ahead of action when it comes to tackling our housing shortage and I fear the mooted increase in stamp duty land tax for non-residents falls firmly into that category.

The proposals for a surcharge on overseas buyers are especially jarring right now. Presenting the UK as an open economy that welcomes overseas investment should be high on the government’s agenda.

Demand-side measures, be they adjusting stamp duty land tax rates or Help to Buy, have created market distortions but haven’t tackled the issue at source. Building more new homes requires supply-side intervention by the government. This would include simplifying the planning process, incentivising town-centre repurposing and where necessary, local and national government coming together to take the lead on building new homes.

Beyond these topics, the industry will be hoping most for an uneventful Budget after successive years of change. In an uncertain world, the chancellor should give the industry breathing space.

By Russell Gardner

Source: Property Week