The Deutsche Bank (DB) property team believes that material changes in buy-to-let (BTL) economics could potentially create a shock to London's illiquid residential property market.
New tax rules will reduce BTL returns on equity towards zero and result in low or negative cash flow, particularly for new landlords, according to DB’s boffins.
On top of that, new mortgage regulation could severely restrict the ability of investors to use leverage to buy properties.
The DB number crunchers expect these changes to result in a substantial fall in BTL purchases, which have accounted for around 40% of all residential purchases in recent years, and the market might even see some landlords selling up, which could be a major drag on a market.
“We estimate that circa 35% of London BTL owners could look to sell – 10% who have capital repayment mortgages, 18% who are recent interest only or mortgage equity withdrawal purchasers (Figure 14 shows that 18% of mortgage stock was issued 2013-15) and we estimate a further 7% of BTL owners could sell due to inheritance tax,” DB said.
It has identified Capital & Counties Properties PLC (LON:CAPC), with its large slug of residential development land in Earls Court, as being particularly susceptible to the risks of a collapse in the BTL market.
Ariana Resources plc (LON:AAU) has discovered another potential gold vein system close to its planned mine at Kiziltepe in Turkey.
At this stage, there is no further information concerning the width or vertical and lateral extent of this new vein and so SP Angel said it is looking forward to further news on the scale of the new discovery as the exploration develops.
“If it proves extensive, Ariana may need to consider whether it will be necessary to relocate the waste rock dump in order to prevent it sterilising access to the new vein. We hope that if this proves necessary it will not add delays in the overall Kiziltepe development programme,” the broker said.
Results from contract development and manufacturing organisation Consort Medical PLC (LON:CSRT) were ahead of consensus forecasts.
That did not stop the share price sliding 1% - about twice as heavy as the Footsie had fallen – in the first hour or so of trading, but Panmure Gordon is keeping the faith.
Bespak has performed particularly strongly with accelerating growth and higher margins than has historically been the case, while margin improvement has also been seen at Aesica, and this is expected to continue, the broker noted.
The share price reaction is likely sparked by slightly later launch dates for nicotine delivery product DEV200 and the dry powder inhaler DEV610, which is initially intended for use in Mylan's generic version of Advair.
Panmure said the delays took the shine off a strong performance, but it is leaving its estimates for fiscal 2017 unchanged, as it says they were already on the cautious side.
“We continue to view Consort as a core holding in UK healthcare and we reiterate our BUY recommendation and 1145p price target,” Panmure said.
The shares currently trade at around 940p.
House broker Cantor Fitzgerald has described the receipt of a €2.05mln grant for industrial fuel cell power company AFC Energy plc (LON:AFC) as “helpful”.
The cash injection, from the European Union’s Fuel Cells and Hydrogen Joint Undertaking, gives the company financial flexibility, the broker said, as it reiterated its price target of 77p.
AFC Energy currently trades at 11.375p.
Potential bid target Poundland Group PLC (LON:PLND) issued results this morning that were in line with expectations, but Liberum says the outlook remain tough, with negative like-for-like sales growth and the continued distraction of the integration of the 99p Stores.
With the shares now trading at around 23 times 2016’s projected earnings, the broker sees little upside from this price point, but advises holding the shares if you’ve got ‘em, in case a bid materialises.