Tag Archives: europe
Remortgage numbers in UK up in June, but value down
The number of remortgages taken out in the UK increased in June, but are down slightly in value month on month and year on year, the latest data shows. The value of remortgaging is now lower than the same time last year, the first month in 2016 where the value of remortgage lending has fallen year on year, according to the figures from LMS. It means that the average amount of equity withdrawn in June has fallen by 15% year on year and 13% month on month while total equity withdrawn is 14% lower than the same time last year. Overall there were 32,873 remortgage loans taken out in June, a rise of 6% from May when there were 30,900 loans and 1% higher than June last year, when there were 32,700 However, June was the first month in 2016 where the value of remortgage lending fell year-on-year, according to LMS and suggesting a drop in momentum. Each month of 2016 saw annual increases in the value of remortgage lending but June bucked the trend, falling from £5.3 billion in June 2015 to £5.1 billion, a drop of 3%. The average amount of equity withdrawn per customer from remortgaging is also lower than last year, down 15% in comparison to June last year when it stood at £34,505. The average amount of equity release has also decreased 13% month on month from £33,691 in May to £29,375 in June. Annually, the total amount of equity withdrawn has also fallen, by 7% from £1.04 billion in May to £966 million in June. This is 14% lower than the same time last year, when equity withdrawn from remortgaging hit £1.13 billion. There is some good news for remortgagors in terms of affordability pressures. In May 2016, average household income was £45,672, recovering slightly from a 10% fall between March and April. The rise in household incomes, and because rates remained stable, means annual repayments for remortgages have fallen from £8,694 to £8,390, nearly £300 less. The monthly rise in income has therefore driven the annual repayment as a percentage of income down from 19.3% in April to 18.4% in May. ‘We witnessed a strong start to the year with remortgage lending up year-on-year each month in 2016, when in a safer, surer climate, home owners had rushed to remortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of remortgage lending down as indecision increased in the lead up to, and following, the referendum,’ said Andy Knee, chief executive of LMS. ‘While we’ll only begin to see the referendum result’s real impact from July’s figures onwards, it is very likely the small drop occurred as people took pause amid Brexit uncertainty before making any decisions. As the terms for Brexit are negotiated, there will be… Continue reading
Lack of funding affecting barn conversion rates in UK
The British love affair with barn conversions seems to have come to an end with new figures showing that the number of agricultural to residential property conversions has fallen. For decades the conversion of agricultural buildings including barns and stables into homes has been popular but now new research shows that in England the number has dropped by 24% over the last year. It suggests that developers are suffering from a lack of funding for such projects so people who want this kind of property are left to funding it themselves. This is despite a there being a considerable appetite amongst farmers concerned about European Union subsidies after the recent Brexit vote to target alternative ways to diversify income, says peer to per property funding platform Saving Stream which carried out the research. The firm believes that agricultural to residential property conversions could still make significant financial sense for farmers and it also makes sense in terms of improving the current lack of housing supply in the UK, especially in rural areas. Saving Stream adds that banks are continuing to de-risk their balance sheets as much as possible, driven by the capital holding requirements placed on them by regulators in the wake of the credit crunch and that private investors are stepping in to help finance these projects as they are attracted to the competitive annual returns of 12% on offer for secured loans at a maximum loan to value ratio of 70%. ‘Converting agricultural buildings such as barns are one of the most effective ways of combating the UK’s chronic rural housing shortage and in the uncertain post-Brexit climate, UK farmers are looking to ramp up activity in this area,’ said Liam Brooke, co-founder of Saving Stream. ‘It is important that access to funding is improved, developers are keen to take-up the large number of opportunities available to them but time and time again a lack of funding is holding them back,’ he added. Saving Stream explains that recent research shows that outstanding lending by UK banks to property developers plunged from £32.5 billion in April 2014 to £14.9 billion in April 2016, a fall of 54%. ‘There are housing shortages across the UK, in both urban and rural areas, and with increasing numbers of possible developments available, this is a perfect opportunity to reduce the housing gap,’ Brooke pointed out. ‘Private investors are helping bridge the funding gap that the UK’s property market has suffered from but there are still plenty of projects struggling to secure the finance needed to get off the ground. There is an eagerness from all sides to increase the number of conversions to help meet demand, however, the biggest issue remains access to funding,’ he added. Continue reading
Foreign owners of property in Australia face new 10% selling tax
New laws introduced at the beginning of July mean that foreign owners of property in Australia worth £2 million or more face paying an extra 10% in tax. Sellers must have proof that they are Australian citizens to avoid the tax which has been introduced in a bid to deter wealthy forging buyers from pushing up property prices. The change came at a time when prices in Australian state capitals were soaring and much of this was blamed on so called wealthy investors, especially from China. The Real Estate Institute of Australia (REIA) supports the legislation, but is concerned that there has not been enough publicity and stressed the importance of real estate and legal professionals understanding their obligations under the new laws. ‘Essentially this is the Goods and Services Tax (GST) process coming into effect in the housing market, which is long overdue in Australia,’ said REIA president Neville Sanders. ‘Failure to get a clearance certificate stating their Australian residency will mean vendors fall under the same conditions as foreign investors and will be required to pay this immediate 10% tax,’ he explained. ‘ ‘It is of the utmost importance that legal professionals ensure the timely receipt of clearance certificates for their clients, to ensure settlements proceed without delay,’ he added. According to Peter Malone, chief executive of GlobalX Legal Solutions, it means that legal professionals are required to ensure their clients are taking the right steps in the selling or buying of property. ‘These changes will affect the growing number of high value homes of Australian buyers and sellers, so it is imperative legal professionals and conveyancers are prepared,’ he added. The new legislation is expected to generate $330 million in revenue over the next four years, with a $770 million compliance cost over the next decade and has been introduced to deter wealthy investors pushing up property prices and making them less affordable for Australians. Maloney said while the imposed tax on foreign investors would help boost the Australian economy and recoup investor funds sent offshore, it was crucial for legal and conveyancing professionals to understand the intricacies of the changes. ‘The onus of proof will now fall on Australian vendors to prove their residency status to exempt them from the new 10% non-final withholding tax but, provided property lawyers and conveyancers are prepared to ensure the necessary documents are readied in advance, this shouldn’t be a timely and complicated process or cause unnecessary delays in the settlement process,’ he explained. ‘We are currently offering our clients a range of informational webinars and sessions to equip them with the knowledge and technical understanding of these changes to ensure the buying and selling process remains a seamless and smooth process for their clients,’ he added. Continue reading
