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First time buyers numbers remained up in 2015, new data shows
The number of first time buyers in the UK remained buoyant in 2015 at just over 300,000 for a second year in a row, according to new data. First time buyers accounted for almost half of all house purchases made with a mortgage in 2015 and more than a quarter are now opting for a 35 year mortgage, according to the annual first time buyer review report from the Halifax. Overall it show that number reached 310,000 and the lender says that although this represents a marginal decline of 0.5% from 311,700 in 2014, the number has grown by 60% since 2011, from 193,700 to 310,000. T It also says that the marginal decline in first time buyers is in line with general residential house purchases, and is partly due to lack of supply. The data also shows that the average price paid by first time buyers increased by 10% in 2015 from £172,563 to £190,180, taking the price above the previous peak in 2007 of £174,994 for the first time. The average deposit paid by a first time buyer at £32,927 was 13% higher than a year ago and 88% higher than the average deposit in 2007 which was £17,499. The report says that is was the higher house prices paid by first time buyers during the year has resulted in an increase in the average deposit paid. In the South East the average deposit paid rose by 24% in the past year, from £35,582 to £44,024 while the highest is in Greater London at £91,409, some five and a half times more than the lowest which was £16,578 in Northern Ireland. Whilst a mortgage term of 25 years has been the norm for some time, many first time buyers are increasingly taking out mortgages where payments are spread over a longer period. In 2007 the proportion of first time buyers taking up a 35 year mortgage was 16% bit in 2015 that grew to 26%. Over the same period, the share of mortgages with a 20 to 25 year term dropped from 48% to 30%. ‘For the second year in succession, the number of buyers getting on the first rung of the housing ladder has reached 310,000. Although the average price of the typical first time buyer home has grown by 10% in the past year, the number of buyers taking that first step onto the housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth,’ said Craig McKinlay, mortgages director at the Halifax. The research suggests that first time buyers are an increasingly important part of the housing market and accounted for 46% of all house purchases made with a mortgage in 2015, the same as in 2014. However, this share has grown from 36% at the start of the housing downturn in 2007. Based on the average price paid by first time buyers, most regions have benefited from the Stamp Duty… Continue reading
Details of extra tax on UK buy to let and second homes unlikely before mid-March
The final details of how the extra stamp duty on buy to let and second home purchases will work will not be known until a couple of weeks before the new tax rate comes into effect in April this year. The government’s consultation period on the proposal for a 3% tax on these kind of property transactions runs until 01 February and officials will then consider the responses and are expected to confirm the final details on the annual Budget announcement on 16 March. The proposal is that the extra rate will apply to most purchases of additional residential properties where, at the end of the day of the sale, individual buyers own two or more residential properties and are not replacing their main residence. The higher rates will also generally apply to purchases of residential property by companies. It would seem that the 3% rate will not apply if at the end of the day of the sale an individual owns only one residential property, irrespective of the intended use of that property. However if following the transaction the individual owns two or more residential properties, the applicability of the additional rate will depend on whether the purchaser is replacing their main residence. Liam Bailey, global head of residential research at real estate firm Knight Frank, has pointed out that while the consultation assumes that most people will buy a new main residence on the same day as they sell their previous one, there will be an allowance for purchasers to have up to 18 months to replace a main residence following an earlier sale. Also where an individual sells their previous main residence after purchasing a new main residence, a refund of the higher rate could be claimed with the window for this refund limited to 18 months after the purchase of the new residence, he explained. He also said that it would appear that the location of additional properties will be global, so the ownership of a property in France for example, will be relevant. Also, the new rate will apply if the purchase is completed on or after 01 April 2016. However, if contracts were exchanged on or before 25 November 2015 but not completed until on or after 1 April 2016, the higher rate will not apply. The details will be important as there are a number of scenarios that could play out, for example parents buying a property for their children, joint purchases between friends and partnerships. Stephen Barratt, private client tax director at accountants and business advisers James Cowper Kreston, believes that the proposed legislation will create uncertainty, introduce many anomalies and take a long time to fully bed down. 'The fact that the new rules are intended to apply to completions on or after 01 April 2016 will mean that many purchasers will be exchanging contracts now without knowing what the final rules will be. This will create uncertainty,' he warned. 'The additional 3% rate is intended… Continue reading
Conveyancers set for a year of change ahead in UK home buying industry
The outlook for conveyancers in the UK is looking like one of change with extra stamp duty and high demand set to make 2016 a buoyant year for the industry, according to the latest sentiment tracker report. Some 27% of conveyancers believe transaction levels will increase by up to 20% this year, according to the report from Searchflow. It also says that with the UK Government encouraging first time buyers to the market and pledging to build new homes there will be change in the industry. The conveyancing industry is very likely to see a rush to complete property purchases prior to April when the extra stamp duty on buy to let and second home purchases becomes active. But according to Maud Rousseau, the firm’s group marketing and communications director this is likely to settle later in the year. ‘If rents remain high and housing stock is still in short supply, buy to let will remain a profitable investment for many. The market will continue to be boosted by new homes,’ she added. She also pointed out that last year saw a record level of new homes being built, up 25% year on year and reaching the highest annual increase in a generation. This trend is set to continue as the Government continues to roll out planning reforms to help increase housing supply. Technology is also set to have an impact. ‘With the advancement of agile technology and big data analytics, search companies are seizing upon the opportunities to drive through major changes. Data and technology providers are working together to create a one stop shop to not only streamline the process but help improve risk management,’ said Rousseau. ‘The trend for transparency within the conveyancing sector will continue to drive the delivery of new product offerings tailored for the homebuyers. These products will enable conveyancers to provide their customers with an improved service, whilst also benefiting from reducing their time required to update clients,’ she explained. The impact of online estate agents is set to be a major topic of debate this year is another issue highlighted in the report and it says that the conveyancing industry needs to be prepared to adapt quickly if online estate agents achieve their ambition of being ‘highly disruptive in the world of estate agency’. This year, there are a number of planned consultations that could have a very significant impact on the conveyancing sector. They included the Government’s consultation on the privatisation of the Land Registry will be closely monitored. And in advance of the review of Legal Services Act which is scheduled to be reviewed during this parliament, the Government has announced its consultation on alternative business models entering into the legal sector. The Government claims that it wants to ensure that innovative businesses are able to enter the market, providing greater choice for consumers. The Solicitors Regulation Authority (SRA)… Continue reading
