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Average price of an affordable house in UK is almost £190,000
The average price paid for properties by buyers using the affordable housing schemes in the UK has reached almost £190,000, new research shows. The overall average price of £189,786 is just 4% or £7,750 lower than the £197,535 average for house purchases as a whole, the research from the Halifax shows. Regionally, the highest average price paid by buyers using affordable housing schemes is in London at £323,148 while the lowest is in the North of England at £147,437. Nevertheless, the average value of a London property sold in a scheme is 33% lower than the average London price of £482,579. The research also shows that first time buyers remain the biggest beneficiaries of Help to Buy housing schemes accounting for 80% of purchases over the last year compared with 46% of all mortgage financed home purchases made by first time buyers over the same period. In the last year, improving economic conditions and government schemes such as Help to Buy saw the highest number of first time buyers purchase their first home for seven years. The latest official figures reveal that Help to Buy equity loans and mortgage guarantee schemes and NewBuy have helped 99,601 buyers acquire a home since the introduction of Help to Buy in the 2013 Budget. Four out five or 79,680 of these purchases were completed by first time buyers. The average price paid by first time buyers using the schemes is now £150,361, some 10% or £16,732 lower than the average price paid by first time buyers for all housing which is £167,093. First time buyers in London see the largest benefits from buying through affordable housing schemes, with an average price that is 36% lower than the average price paid by first time buyers in the capital generally at £236,733 compared to £367,961. ‘Many of the affordable home ownership schemes available have been designed specifically to help first time buyers get on the ladder and support construction of new build homes and the latest official figures show this has been successful,’ said Craig McKinlay, mortgages director at the Halifax. ‘As the economy continues to recover and mortgage interest rates remain at very low levels. We expect to see continued growth in first time buyers during the second half of the year,’ he added. The research also looked at the profiles of borrowers buying a home under affordable housing schemes to find what typical scheme users are like. It found that 17% of affordable housing transactions in the 12 months to May 2015 were in Scotland followed by the South East at 15% and the North West at 10%. By comparison, some 20% of all housing transactions were concentrated in the South East, and 12 % were in Scotland and 10% were in London. The average gross annual income of a home buyer purchasing through an affordable housing scheme is £31,886, which is 5% lower than the average earnings for all those in full time employment at £33,475. Regionally,… Continue reading
New housing developments do not impact on surrounding house prices
A new study has shown that new house building in the UK has little discernible and consistent impact on local house price patterns. The report by LSE London at the London School of Economics and Political Science and jointly commissioned by Barratt Developments, the largest house builder in the UK, and the NHBC Foundation, examined whether a new development will always reduce prices or reduce the rate of increase in prices in the immediately surrounding area. Examining the impacts of eight recent residential Barratt developments on their local areas, the research concluded that prices did not decline as a result of development, although sometimes there may be some limited impact during construction. Once the developments were completed, the local areas generally moved with the market. One of the most common concerns of home owners across the UK is that a new build residential development nearby will reduce property values in the local area. For many people their new home is their largest single investment. The selected sites all involved fewer than 300 units and were substantially completed within the last five years. Spread across the South and Midlands these sites are typical of housing development outside city centres or wholly rural areas. The aim was to exemplify ‘ordinary’ developments mainly on sites where there had been objections, some significant, at planning permission stage prior to development. Five sites were built on land with previously higher amenity value, and three were built on land that previously had lower amenity value including derelict industrial land. Specifically, the research found that house price changes in the surrounding streets and the broader three or four digit postcode districts suggest that new developments may stabilise or even increase prices in the immediate areas once development is complete where the market is generally stable and rising. They also suggest that there is almost no evidence of Longer term negative impacts. For sites where a high level of opposition was experienced throughout the planning and construction processes, this opposition tended to decrease once the development is completed. In one case where there were high levels of opposition, at least half of all eventual purchasers of the new homes previously lived within five miles of the development. ‘Few would argue that the UK needs to build substantially more homes to avoid a housing crisis, but despite this, local opposition remains one of the main obstacles to achieving this,’ said Neil Smith, head of research and innovation at NHBC. ‘It is understandable that home owners will be anxious to protect their investment in their homes, and concerns about the negative effects of new developments have compounded the issue,’ he explained. ‘While there are clearly a number of factors affecting property values in specific areas, this research challenges the assumption that new build developments will adversely affect local house prices,’ he added. Philip Barnes, group land and planning director at Barratt Developments Plc, acknowledged that one of the understandable fears of new development is that… Continue reading
Over half of UK landlords will increase rent due to tax cuts, poll shows
More than half of UK landlords who took part in a new poll said that they are likely to increase their tenants’ rents as a direct result to tax changed announced in the Mini Budget. Some 56% said they would need to respond with rent hiked to Chancellor George Osborne’s cutting of mortgage interest reliefs from 45% to 20%, in the poll by lettings agent Rentify. The poll also found that 57% are likely not to expand their property portfolio beyond its current size in the face of the cuts and 23% said they may plan to sell off their current properties. ‘These statistics are a stark reminder that if landlords aren’t incentivised to be landlords then they will just stop buying. The Chancellor’s cutting of the mortgage interest relief remains a very unwelcome decision and one that could irreparably damage the approach of many buy to let landlords and quality of living for their tenants,’ said George Spencer, chief executive officer of Rentify. Spencer said it is not good news coming on the back of recent research showing that more than half of 20 to 39 year olds will be renting property from private landlords rather than living in their own homes a decade from now. He explained that the current mortgage reliefs helped UK landlords offset other costs such as high street lettings agent fees, home insurance, maintenance and repairs costs, as well as council tax and any ground rent. ‘Mortgage interest relief often makes up a large proportion of deductible costs for landlords, and reduces their tax bills significantly,’ he added. Continue reading
