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Property equity release to older home owners in UK up 17%
Retired home owners in the UK cashed in more than £750 million of property wealth in the first six months of the year as the equity release market continued to expand, an new analysis shows. The average amount released nearly was almost £68,500, an increase of £3,500 on the same period last year, according to the half year equity release report from over 55s finance specialist Key Retirement. The total released £753 million, an increase of 17%. The firm said that the increase highlights pensioners’ confidence in using property wealth for retirement planning. A breakdown of the data shows there are, however, wide regional variances ranging from average releases in the North West of over £53,000 to over £142,000 in London. Across the country eight out of 12 regions saw growth in the value of property wealth released with the North East recording a 50% rise, the South East 35% and London a 30% increase. The value released dropped 13% in the North West. Eight out of 12 regions recorded rises in plan sales with three virtually unchanged. London saw a 28% rise and the North East a 31% increase The money is being used to boost standards of living in retirement with 58% of customers using some or all of their cash to improve their home or garden while 28% have used their property wealth to pay for holidays. Family and friends are also benefiting from retired homeowners’ property wealth with 25% of over 55s handing out cash to relatives, according to the report. However mortgage debt, including interest only loans, is emerging as a major issue with 23% of customers paying off home loans with some or all of the money, compared to 20% for the same period of 2014. Around 29% also used the cash to pay off credit cards or loans. The research also reveals that equity release customers are getting older. The average age rose to 71 in 2015, from 69 previously, but they are also wealthier thanks to house price rises with average property values rising 9% to £271,248 from £249,108. ‘Property wealth is making a massive contribution to retirement planning and the equity release market is growing rapidly in response with double digit growth. The average amounts released at £68,500 are more than 50% bigger than the average pension pot and are also tax-free highlighting the advantages of using property wealth in retirement,’ said Dean Mirfin, technical director at Key Retirement. ‘Cuts in pension allowances and contribution levels plus the review of pension tax treatment underlines that property investments are major assets which should be considered as part of anyone’s retirement planning,’ he added. Continue reading
Mayor of London announces Domesday Book of public land for building homes
The Mayor of London Boris Johnson is to publish the UK’s first database or Domesday Book of all brownfield public land that could be freed up for house building. Johnson said it will the first ever coordinated effort between City Hall, government and London boroughs to free up surplus public land to build the homes that the city so desperately needs. The London Land Commission has appointed real estate research firm Savills to compile the preliminary stages of public land data base which will be completed by the end of 2015. Once collected, City Hall will use the data to map the spread of sites across the city. It is thought to be the first time such a comprehensive set of data has ever been collected for London. The creation of the commission follows announcements from Chancellor George Osborne last week on major planning reforms designed to speed up development of brownfield land in London and increase capacity to build more homes in the areas they are most needed. The commission will build on work already begun by the Mayor in disposing of his own land holdings for development. At present 98% of all land previously in his ownership has been released, within touching distance of the 100% target for the end of his term in 2016. The commission will also work across layers of government and public bodies to develop strategies for unlocking public land for development and thus identify priority areas for future growth and co-ordinate efforts to fast track the process, whilst ensuring a good return for the taxpayer and better regeneration sites across London. The inaugural meeting was attended by London councils, NHS England, Transport for London and Network Rail with participation at the highest levels from other bodies such as the Department of Health. ‘The London Land Commission will build on the great efforts we've already made at City Hall to ensure brownfield land that has laid empty for years is put to productive use in providing much needed housing for Londoners,’ said Johnson. ‘In a city like ours, with its burgeoning population, it is simply madness not to act as quickly as we can to unlock more of these kinds of sites. The Commission's work will be vital in co-ordinating the efforts of a whole raft of public bodies to achieve this important goal, helping to cut through the red tape that has kept valuable land tied up for too long,’ he added. Housing Minister Brandon Lewis said there is clear demand to release land and provide more homes for Londoners. ‘The London Land Commission will bring a joined up approach to land release in the capital, regenerating brownfield land and providing more homes, whilst continuing to protect the green belt around our Capital,’ he explained. London Councils executive member for housing and Mayor of Lewisham Sir Steve Bullock said it is vital is that our overall strategy to tackle the housing crisis delivers an increase in… Continue reading
UK govt revises its medium term house price growth forecast downward
The UK government thinks house prices will grow sat a slower rate than previously expected in the medium term, mainly due to changes in lending. The latest forecasts from the Office for Budget Responsibility (OBR) reveal that overall, house prices are expected to rise by 34.1% by the first quarter of 2021 with the outlook revised from the last guidance which was issued in March. The OBR cites changes to the regulatory environment as well as changes to lenders’ behaviour brought about by the Mortgage Market Review (MMR) which came into play in April 2014 as reasons for the revision. As a result, the estimated cumulative level of house price growth by the first quarter of 2020 is 5% lower than it was in the March forecast so the growth prediction is now 34.1% by the first quarter of 2021. The OBR has also revised its forecasts for Stamp Duty revenue which is now forecast to raise £11.5 billion in 2015/2016, rising to £17.3 billion in 2019/2020 compared with the March forecast of £10.4 billion £18 billion respectively. So, compared with its March forecast, SDLT receipts are expected to be £1.1 billion higher in 2015/2016 but £0.7 billion lower by 2019/2020. The OBR said it has changed its short term forecast for stamp duty receipts because residential property transactions were higher than expected at the end of the 2014/2015 financial year, a trend it expects will continue. In the long term, lower house prices relative to the March forecast reduce receipts by around £1.2 billion in 2019/2020. Meanwhile, the selling market is expected to be busier this summer. Traditionally the prime months for selling houses were March through to the end of June with a second period of activity in September and October. These two seasons reflected the end of spring and school summer holidays. However, according to real estate firm Knight Frank there has been a change in recent years, with the market continuing through the usually quieter summer months. The number of properties sold by Knight Frank between June and August 2014 was in fact 25% higher than in 2013. ‘The increase in summer activity is a reflection on a number of factors including the popularity of holidays being taken in the UK and thus being able to see a house more quickly and the rise of the internet allowing holiday makers to browse their tablets and phones whilst relaxing,’ said Rupert Sweeting, head of Knight Frank Country. ‘We are seeing this happen again this year principally as the election made many buyers put their decisions on hold until after the result was known. As a result the market is six to eight weeks late. We already have a high level of house bookings going forward this month and in August,’ he added. Continue reading
