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Train lines reopening unlocks new frontiers for the housing market

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For the people of the Blyth Valley, it’s payback time. Transport Secretary Grant Shapps has announced a £34million fund to start to reinstate the passenger rail line between Newcastle and Ashington.

This is seen by many as a reward for being the first constituency to breach the ‘red wall’ of seats extending across the Midlands and North of England in the 2019 general election, which gave Boris Johnson his victory. Yet it is far more than a cynical political gesture.

‘Re-opening that line in 2024 will have a massive effect on the area’s economy,’ says James Middleton, a regional partner with Garrington Property Finders.

Iconic: The Tyne and Swing bridges of Newcastle. The government has announced a £34 million fund to start to reinstate the passenger rail line between Newcastle and Ashington

Iconic: The Tyne and Swing bridges of Newcastle. The government has announced a £34 million fund to start to reinstate the passenger rail line between Newcastle and Ashington

‘It will mean two-way regeneration with people living near the line commuting more easily into Newcastle for work and vice versa. 

‘This is sure to be good news for the property market, which has been flat-lining.’

The project will assure that the line, which is currently only used for freight, is refurbished and new stations opened in Ashington, Bedlington, Blyth Bebside, Newsham, Seaton Delaval and Northumberland Park in North Tyneside.

This is an area that has struggled since the closure of the coal mines in the late 1980s, with high unemployment and rundown town centres. Yet, it is far from being on the scrap heap.

Northumberland-born legend Sir Bobby Charlton

Northumberland-born legend Sir Bobby Charlton

A former mining town, Ashington has societies for every activity that is traditionally associated with the North East, including leek growing, whippet racing and pigeon fancying.

It is the town that produced Northumberland’s three greatest footballers: the Newcastle hero Jackie Milburn and the Charlton brothers, Jack and Sir Bobby.

‘We are close to the most glorious wild and unspoilt coastline and only a 15-minute drive to the Northumberland National Park,’ says local estate agent Mike Rogerson. 

‘That rail line is going to bring a huge boost to the area in terms of housing, employment and education.’

It is today’s house prices that are the main attraction. 

In Ashington, the average property sold for £119,000 last year, according to Rightmove.

A terrace cottage on average costs £78,000; a semi-detached £132,000 and a detached would be £196,000 —which is reasonable even by Northumberland standards.

There is a five-bedroom newly built Charles Church home for sale for £320,000 in Carnoustie Close, Seaton Vale, Ashington. 

It has an open-plan kitchen dining room opening onto the garden; two of the bedrooms are en-suite and there is a double garage.

The Ashington to Newcastle line is the first of a collection of lines the Government is considering reopening as part of the Prime Minister’s pledge to reverse the legacy of Dr Richard Beeching, the former British Rail Chairman, who in closed more than 2,300 stations in the Sixties.

Another ambitious rail project – targeted for 2025 – is a direct service between Bicester and Bletchley as part of the better link between Oxford and Cambridge.

This will see two trains an hour running between the Oxfordshire and Buckinghamshire towns.

A link was opened between Oxford and Bicester in 2016.

This is likely to bring about yet more expansion to the boom town of Bicester. Marked as one of the new ‘garden towns,’ it is a key area of growth with some 13,000 homes in the pipeline.

An excellent location is the town’s core attraction, being near the M40 which links to Birmingham and London. It is also a commuter town for Oxford, just 15 miles away.

A mix of the old and the new, Bicester has a bustling market every Friday, while for those seeking retail therapy (post-lockdown) there is Bicester Village shopping centre, which attracts three million visitors a year.

Average prices in Bicester range from £275,000 for a terrace house to £288,000 for a semi-detached and £433,000 for a detached, according to Rightmove.

And like the towns on the Ashington to Newcastle line, prices are expected to spiral when the new line is finished. Our rail links should never be overlooked.

On the market… on the Newcastle Line

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Could equity release be used to help more younger homebuyers?

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Younger first-time buyers could be given more financial help from the Bank of Grandma and Grandad, through the use of improved equity release products, a new report suggests.

The document written by Tom McPhail, of consultancy The Lang Cat, claimed that younger buyers are missing out because older members of their family are unable to satisfactorily tap into their property wealth.

Mr McPhail said: ‘Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations.

‘An equity release by grandparents of say £20,000 now, could be transformational for a 20 something struggling to raise a deposit and get on the housing ladder but would make only a very modest dent to the value of the grandparent’s house.’

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

The report acknowledged that equity release has endured a poor reputation in the past after customers suffered ‘severe’ financial knocks.

The sector has been criticised for encouraging people to take on debt, particularly later on in life.

There has also been other concerns about equity release, such as customers falling into negative equity where the value of a property is less than the loan taken out against it when house prices fall.

The report suggested that while the equity release sector has since begun to put ‘its house in order’, it is ‘still not perfect’ and some regulatory safeguards need to be strengthened.

It called for several issues to be looked at, including early redemption charges on equity release products.

It said that most providers apply a simple sliding scale of charges, for example 10 per cent in year on to 1 per cent in year 10.

However, it claimed that some providers apply an early redemption charge based on prevailing gilt rates at that time, putting customers at an ‘unfair disadvantage’.

This is because the fees are not transparent as there is no way a customer can know in advance whether they’d be liable for a charge and if so, how much. 

In the past, customers have also fallen foul of the small print on their equity release loans when it comes to early-redemption penalties – such as couples who must pay an exit fee unless both of them need to go into care.

The report also raised questions about interest rates on equity release products. It said providers should be consistent with their lending criteria and not move the goalposts after customers have taken out a loan, as this can make it harder for them to access a top-up loan in the future, potentially forcing them to remortgage. 

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

The report argued that equity release products could help people access their property wealth to help younger members of their family onto the property ladder.

Mr McPhail added: ‘Raising a deposit has become an increasingly significant barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations.

‘Releasing some of the equity in a property allows older homeowners to choose when and how they share their wealth with the younger generation.

‘This more targeted approach gives them greater control to use their assets to the maximum benefit at the point of need.’

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report's author Tom McPhail

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report’s author Tom McPhail

Equity release: How it works and advice

To help readers considering equity release, This is Money has partnered with Age Partnership+, independent advisers who specialise in retirement mortgages and equity release. 

Age Partnership+ compares deals across the whole of the market and their advisers can help you work out whether equity release is right for you – or whether there are better options, such as downsizing. 

Age Partnership+ advisers can also see if those with existing equity release deals can save money by switching. 

You can compare equity release rates and work out how much you could potentially borrow with This is Money’s new calculator powered by broker Age Partnership+.* 

 * Partner link

Jonathan Harris, of mortgage broker Forensic Property Finance, said: ‘Equity release has historically been viewed as a ‘murky’, high-risk sector, fuelled by minimal regulation, poorly-qualified advisers, only a handful of lenders and extortionately high interest rates.

‘Fast forward to today and we see a dramatically transformed sector, benefiting from strict regulation, highly-qualified advisers, multiple lenders and access to very competitive interest rates. 

‘Not surprisingly, equity release is now a viable and growing market for older borrowers looking to utilise the gains seen on property prices to bolster lifestyles, as well as pass on wealth to children when they need it.

‘Those considering equity release should make sure they understand the implications and involve family in any decision-making. It is always important to seek advice from suitably-qualified advisers.’

It comes as a separate report by Legal & General suggested that one in every £90 spent by retired Britons is funded by equity release.

It said that equity release funded an estimated £3billion in retirement spending last year, although it didn’t mentioned the money going to younger generations towards buying a property.

Instead, the report’s survey of 2,000 homeowners found that those with equity release have most frequently used the product to finance home improvements, at 26 per cent.

It said equity release is also being used to support costs such as medical expenses at 17 per cent, maintaining living standards in retirement at 16 per cent, and paying off personal debt at 16 per cent, for example paying off interest-only mortgages. 

It suggested that equity release is likely to play an increasingly important role in financing care-related expenses, with 19 per cent of prospective homeowners citing it as a consideration.

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Allianz Real Estate buys prime office building in Rome (IT)

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Allianz Real Estate, advised by Dils, has acquired an office property in the centre of Rome. The transaction, worth circa €175m, is one of the most important to have been carried out on the real estate market in Rome in recent years.

 

The building, consisting of eleven storeys, comprising nine above-ground and two underground, has a gross lettable area of circa 22,000m² and has undergone a major refurbishment, offering the highest environmental sustainability and energy efficiency standards (LEED Gold Certification). The strategic location, between the CBD and Termini Station, is enjoying great success, especially among corporate occupiers. 

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NCC sells Valby office scheme (DK)

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NCC is selling Kontorværket 1 office project in Valby, Copenhagen to Industriens Pension. The building will become biotech company Genmab’s new headquarters and will meet high environmental standards for both the building and the area. The transaction will be conducted as a company divestment, based on an underlying property value of approximately €81.9m (SEK875m). Transfer of the project and payment of the purchase consideration is expected to result in a positive earnings effect in the NCC Property Development business area in the first quarter of 2023.

 

“We are now selling Kontorværket 1, the first phase of our development project in Valby in the central parts of Copenhagen. Here we have developed property with an optimal infrastructure and appealing architecture, and I am pleased that Industriens Pension is now taking over,” said Joachim Holmberg, Business Area Manager, NCC Property Development.

 

Kontorværket 1 encompasses 16,000m² of lettable area and also includes a basement featuring a parking garage next to the building, with space for 280 vehicles and facilities for parking bicycles.

 

“This is an attractive and future-proof office property, located in an area with very good infrastructure, a motorway, a nearby metro and S-train station. The 15-year lease with Genmab fits well with our strategy as a long-term owner, and we expect the property to contribute a stable return for our members for many years to come. We look forward to welcoming Genmab’s experts in biotechnology,” said Soren Tang Kristensen, Head of Real Estate Investments, Industriens Pension.

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