News
Rents in UK set to rise in next five years, according to lettings agents
A third of lettings agents in the UK reported that rents increased in April, the latest data shows, and many believe they will continue rising over the next five years. The latest monthly private rental sector report from the Association of Residential Letting Agents (ARLA) shows that in the North West some 46% of landlords reported an increase in the region. Overall nine in 10 agents reported that they were happy with the general election result and with Labour’s rent cap proposals thrown out, 79% of ARLA agents predicted that rents will increase over the next five years. The report also shows that in the last month, the number of landlords selling their buy to let properties has increased, particularly in London. ARLA agents in London saw the number of landlords selling their buy-to-let properties double between March and April, rising from three to six properties on average per branch. Scottish agents saw an increase from four to seven buy to let properties going up for sale in the last month, whilst the national average increased from three to four buy to let properties up for sale on average per branch. ‘It is interesting that we have seen an increase in the amount of landlords selling their buy to let properties in the last month, which is likely to have been a result of political uncertainty,’ said David Cox, ARLA managing director. ‘We know that Labour’s plans were unpopular for many landlords and agents, so this increase in those selling their buy to let properties may have been a knee jerk reaction to the possibility of Labour’s proposals coming in to practice,’ he added. Following the general election result earlier this month 90% ARLA letting agents were happy with the outcome of a majority Conservative government with 95% believing the result is good news for the private rented sector. Some 13% of those agents said it was good news because the Conservatives will interfere less with the industry and 11% believe the result will provide certainty and stability to the market In April, supply and demand remained similar to last month. On average, ARLA member branches managed 193 properties, compared to 192 in March. In April, ARLA agents reported an average of 36 prospective tenants per branch, which remains exactly the same as March. ‘It is going to be interesting to see what happens in the market in the next few months following the election result and whether we see an increase in supply of rented accommodation as a result of the Conservative’s promise to build 200,000 new starter homes offered at 20% discount to first time buyers. This policy will help first time buyers make that leap onto the housing ladder and as a result this will hopefully free up rental property,’ Cox pointed out. ‘Hopefully, now the country is under less political… Continue reading
Home lending in Scotland falls in first quarter of 2015
Lending for homes in Scotland decreased in the first quarter of 2015 by 20% compared to the fourth quarter of 2014 and down 1% year on year, the latest data from the Council of Mortgage Lenders shows. These loans reflected lending of £1.7 billion, down 13% compared to the previous quarter but up 15% on the first quarter 2014. First time buyers took out 5,400 loans in Scotland, worth £580 million, down 23% by volume compared to the fourth quarter of 2014 and down 24% by value. Compared to the first quarter of 2014, the number of loans decreased by 7% but the amount borrowed increased by 2%. The CML data also shows that first time buyer affordability changed slightly in Scotland quarter on quarter with first time buyers typically borrowing 2.86 times their gross income, less than the 2.9 income multiple in the fourth quarter 2014 and less than the UK average of 3.37. The typical loan size for first time buyers was £94,795 in the first quarter, down from £97,200 in the previous quarter. The typical gross income of a first time buyer household was £33,499 compared to £33,965 in the previous period. There were 6,700 loans to home movers valued at £1.1 billion, down 17% in volume and down 6% in value compared to the fourth quarter 2014. Compared to the first quarter of 2014, there was an increase of 5% in volume and an increase of 24% by value. Seasonal factors play a part in the lull commonly seen in lending activity during in the beginning of the year, according to Linda Docherty, chair of CML Scotland. ‘What is encouraging is that home movers have been increasing year on year and first time buyer and remortgage levels are relatively consistent with last year,’ she said. ‘It is likely that we will see an upward trend in lending moving forward as we approach the summer months. The introduction in Scotland of the Land and Buildings Transaction Tax will mean the majority of new borrowers paying less tax, which should also provide a boost to the market,’ she explained. She also pointed out that while overall loan numbers are relatively on par with last year, the value of this lending has climbed 15% as the value of Scottish homes continues to rise. ‘Now that the Land and Buildings Transaction Tax has come into force, buyers will be looking to capitalise on the new savings on offer, as well as competitive loan rates. Combined with the lenders’ appetite to lend, this should assist the housing market bounce back post-election as we enter the summer months,’ she added. Christine Campbell, managing director of Your Move Scotland, also pointed out that lending in the opening three months of the year is typically lower as the mortgage market is more lethargic before getting back into a rhythm. ‘In light of that, and despite having to negotiate an unpredictable general… Continue reading
Survey reveals confusion over UK new mortgage rules one year on
Some 45% of people who planned to buy a property since the introduction of the UK Government’s new affordability rules last year have failed to do so, new research has found. And many feel less in control of securing a mortgage as the new Mortgage Market Review (MMR) introduced a year ago has created confusion, according to the research from Experian. A quarter claim that the MMR has impacted their ability to buy a property, while 37% report that the changes have made them feel less in control of securing a mortgage. The research also suggests that among those who were unable to buy since the introduction of the MMR, many still appear to be overlooking the basics in financially preparing to apply for a mortgage. For example, 46% have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money. ‘Preparation is the key to successfully navigating the mortgage market post-MMR. Understanding the affordability rules and how a lender makes their decision is the key to success,’ said James Jones, head of consumer affairs at Experian. ‘But it can take time to build a positive credit history and a solid track record of positive money management, so it’s important you start preparing as soon as you make the decision to buy,’ he added. The research also found that 62% were not aware that lenders may require bigger deposits, 23% believed they could apply for mortgages with smaller deposits than before while 37% didn’t recognise that lenders would now be more careful on whether they could afford repayments and 15% mistakenly believe that lenders have now relaxed their lending criteria as a result of the MMR. Some 13% do not know how much money they have left over at the end of the month, 18% don’t even know what monthly repayments they can afford, 14% did not have a big enough deposit for the property they wanted and 12% were unable to secure the size of mortgage they needed. Experian said it was concerned that 11% of those who were unsuccessful did not know why or haven’t asked their lender, leaving them at a significant disadvantage when it comes to improving their chances of being accepted in the future. Guy Shone, from Explain the Market, said that it seems many people remain stuck in a bit of a muddle.’ More needs to be done in 2016 to encourage personal financial planning and properly support aspiring home buyers, so that all buyers fully understand the rules of the game and stand the best chance of securing a property they can afford,’ he explained. Continue reading
