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RICS sets out bold new vision for UK property market
The Royal Institution of Chartered Surveyors has proposed a new solution to solve the UK's chronic housing shortage including the introduction of a new land classification. There are a raft of recommendations in the Property in Politics report with the new classification called Amberfield which would create a pipeline of 'ready to go' land, increase housing supply and promote development opportunities. Under RICS proposals, Local Authorities and communities will have to work together to label sites favourable for development as Amberfield and each Local Plan will have to include a set quota of Amberfield, ready to be developed for housing. The quota is expected to be set between 30 and 50% but the framework and guidelines for each quota would be open to consultation in order to match the specific needs of each Local Authority and community. Amberfield sites would have to be developed within five years and therefore Local Authorities will be required to approve planning consent for Amberfield within a set time frame, otherwise the Authority would risk being classed as 'failing' under the RICS proposed OfPlan assessment. The new classification will enable local housing needs to be met and would create a five year land supply that works for communities and builders. The community will have better understanding of the planning process, more control over what is built where, and be able to see the long term development plan. While both brownfield and greenfield play an important role in the current planning system, both classifications block or slow development and local growth is being impeded by extensive battles to bring forward land. RICS says that Amberfield will speed up the process and take out cost for both developers and local authorities, enabling homes to be built faster on the agreed sites. It will provide certainty to investors, unlocking development opportunities, and will also encourage local infrastructure investment. The review of land classification, coupled with the other RICS recommendations, including Development Delivery Units (DDUs) and a nationwide housing zones programme, will cut through the bureaucracy barriers, speeding up housing delivery and encouraging cooperation across local authority boundaries, stitching together the regions. The RICS Property in Politics report is the result of the largest consultation ever undertaken by RICS, with property professionals from across England sharing insight into the biggest challenges currently facing housing, planning and development, construction and infrastructure and what actions a future Government should take to remedy them. ‘A new classification labelled Amberfield would speed up the delivery of appropriate housing stock. The housing market plays a fundamental part in the UK economy and adequate, affordable housing supply is vital to the UK's economic growth. The planning system needs to be responsive to the needs of customers and increased confidence is needed in which sites can be taken forward,’ said Jeremy Blackburn, RICS Head of Policy. ‘We would suggest a quota of 50% Amberfield for most Local Authorities as it would enable them to deliver the appropriate housing stock required, but it… Continue reading
New mortgage regulations hitting buyers with dependents and low incomes the most
Borrowers in the UK with dependents and on low incomes seeking a mortgage to buy a home have been the hardest hit by the new MMR regulations introduced earlier this year, new research shows. Lenders identified low income borrowers (85%), borrowers with dependents (77%) and self-employed or single borrowers (both 38%) as the three types of borrowers who have felt the biggest impact in terms of what they can borrow. Brokers felt borrowers with dependents have been the most affected (72%), followed by low income borrowers (60%) and self-employed borrowers (47%), according to the research by the Intermediary Mortgage Lenders Association (IMLA). Almost two thirds of brokers, 63%, believe significantly more borrowers are being turned down as a result of interest rate stress tests, but just 15% of lenders agree. The difference is likely to reflect the fact that while lenders are reporting on trends within their individual businesses, brokers working with multiple lenders have a view across the wider market. It may also be the case that brokers are advising some borrowers against submitting an application to lenders, based on a discussion about their finances and needs. However, both parties do agree that stress tests have had more of a direct impact on the amount consumers can borrow, compared with other changes to the MMR approval process. Some 79% of brokers believe interest rate stress tests have reduced the amount that can be borrowed, with over half of lenders, 55%, in agreement. More than one in three brokers, 35%, feel that stress tests have reduced loan sizes by more than 10%. Fewer brokers believe that more detailed income/expenditure assessments (58%) or evidencing requirements (42%) have had a direct impact on what consumers can borrow, although these numbers are still significant. Lenders report less of an effect with 45% believing income/expenditure assessments have reduced loan sizes, but fewer than 10% feeling evidencing requirements have had any effect. The majority of lenders, 71% and 58% of brokers believe that MMR will have a positive effect on consumers by improving the quality of advice they receive. Some 81% of lenders also believe the changes will improve consumers’ awareness of mortgage affordability and their related expenditure, with 61% of brokers agreeing. However, there are concerns over the implications on products, with 71% of brokers believing MMR will have a negative impact on sourcing mortgages. Reflecting this, 54% of lenders feel it will negatively impact product innovation and limit their capacity to develop new offers. ‘For many lenders, the MMR switchover has been more of a gradual shift than an overnight change. Even so, these are still early days and with processes being fine-tuned the real test will come beyond the six month milestone when we see if these effects have eased off or endured,’ said Peter Williams, IMLA executive director. ‘The fact that interest rate stress tests are having the biggest impact on borrowers shows they are doing their job by identifying those who would struggle to manage their repayments if rates rise…. Continue reading
Difference between asking and selling prices in Scotland narrows
Average asking prices across Scotland increased by £2,000 and the average selling price increased by over £8,500 to £162,122 in the second quarter of the year, narrowing the gap between the two to less than 1%. Flats continue to sell above their asking price typically selling for around £18,000 more, up from £11,000 last quarter, according to the latest index from s1homes. This means that the average selling price for flats increased by over £8,500 to £126,844 while the average asking price rose by around £1,500 to £108,472. Both the average asking and average selling price of terraced houses increased this quarter, up by £4,000 and £9,000 respectively. Terraced houses on average sell for £11,000 more than their asking price up from £7,000 in the previous quarter. This quarter the average selling price for a terraced property has increased and is once again higher than the average asking price. It increased by over £8,000 to £150,458. There is less than £1,000 of a difference between the average asking price and average selling price this quarter. Detached houses are the only property type where a Reality Gap exists and this has remained at 13% for a second consecutive quarter as both the average asking and selling prices increased. Typically detached houses sell for £37,000 less than their asking price. A breakdown of the figures shows that in Argyll and Bute the Reality Gap has narrowed significantly from £47,000 to £28,000 driven by the increase in the average selling price. The average selling price increased by £21,000 to £156,495. In Ayrshire the average selling price has increased by £10,000, narrowing the Reality Gap to £21,000, down from £31,000 last quarter. For a second consecutive quarter the average asking price remains relatively static at £146,336. The Reality Gap has narrowed in East Lothian where on average properties are selling for £27,000 below their asking price compared with almost £36,000 in the previous quarter. The average selling price has increased by £15,000 to £209,349. In East Renfrewshire, the Reality Gap has narrowed to 6.5% with properties on average selling for £16,000 less than their asking price. Both the average asking price and average selling price have increased, rising by £9,000 and £16,500 respectively. In Edinburgh, properties are once again typically selling for more than their asking price. This quarter both the average asking price and average selling price increased, the average asking price by £6,000 and the average selling price by £12,500. In Falkirk, the Reality Gap has narrowed from £24,000 to £15,000 despite the average asking price increasing by £4,500 as the average selling price increased by over £13,500. The Reality Gap in Fife has widened slightly this quarter with properties typically selling for around £11,000 less than their asking price. The average asking price and average selling price this quarter both increased by around £2,000. In Glasgow/Dunbartonshire both the average asking price and average selling price have increased by £3,500 and £3,000 respectively. The Reality Gap remained at 5% with properties typically selling for almost… Continue reading
