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UK small home builders get finance boost
Small house builders in the UK are to benefit from a £100 million cash boost to recognise and support their important role in keeping the country building. Housing Minister Brandon Lewis said that The Housing Growth Partnership will act as a dedicated initiative that will invest alongside smaller builders in new developments, providing money to support their businesses, helping get workers onto sites and increasing housing supply. The Partnership will also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses. The latest figures show that in the last 25 years, the number of firms building between one and 100 units a year has fallen from over 12,000 to fewer than 3,000 but house building figures show starts have more than doubled since those seen during the same period in 2009 and Lewis said he wants smaller firms to be involved in this growth. The government has matched a £50 million investment from Lloyds Banking Group to create the £100 million Housing Growth Partnership, which will be used to help smaller builders to invest in new projects and develop their businesses, allowing them to recruit and train skilled workers and become more competitive in their local area. The partnership expects to make around 50 investments, with the aim to provide an additional 2,000 homes. ‘The 2008 economic crash devastated our army of small builders, with delivery falling from 44,000 homes to just 18,000 and now seven years on companies are getting back on their feet but we’re determined to give them all the help they need,’ said Lewis. ‘Access to finance is one of the biggest challenges they face so this £100 million commitment will help our smaller builders fund new projects, expand their businesses, create more jobs and build more homes,’ he pointed out. ‘With housing starts at a seven year high and climbing and homes granted planning permission at 261,000, the highest since 2007, this work will ensure we maintain this momentum and keep the country building,’ he added. According to Andrew Bester, group director and chief executive of commercial banking at Lloyds Banking Group, it will help address the challenge of housing supply and affordability in the UK’s housing market. ‘It will provide SME house builders with much needed equity to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance. We believe building both a greater quantity and mix of homes will help Britain prosper,’ he added. Brian Berry, chief executive of the Federation of Master Builders, confirmed that one of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. ‘Without adequate access to finance they cannot bring forward the number of new homes they would otherwise,’ he said. ‘The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved. We… Continue reading
US housing negative equity rates falling, latest data shows
The housing market negative equity rate in the United States is falling but more than half of underwater home owners are nowhere near resurfacing, the latest research shows. More than 4 million US home owners owed the bank at least 20% more than their properties were worth in the first quarter of 2015, according to the report from real estate firm Zillow. That means those homes would have to appreciate at least 20% for their owners to have any chance of breaking even on a sale. While home values are forecast to continue rising, they are expected to do so at a slower pace than recent years. Overall the national negative equity rate dropped to 15.4% in the first quarter, down from 18.8% in the first quarter of 2015. The data also shows that the rate of negative equity improved in all of the 35 largest housing markets in the first quarter of 2015, a sign that, metro by metro and home by home, the country is continuing to recover from the lax lending rules and subsequent housing market bust of the last decade. At the peak of the real estate crisis, more than 15 million home owners owed more on their mortgages than their homes were worth, putting them in negative equity. Foreclosures, short sales and rapidly rising home values freed nearly half of those home owners, leaving 7.9 million home owners upside down at the end of the first quarter of 2015. Home owners who remain underwater will likely be the toughest to free from negative equity, the report points out. It also explains that while spring and summer are the busiest buying and selling seasons and this year there is high demand for homes in the bottom third of the market, a disproportionate number of those home owners are simply stuck in their homes and can't afford to sell to buyers looking for homes in their price range. The rate of underwater home owners was much higher among the homes with the least value. More than 25% of those who own the least valuable third of homes were upside down, compared to about 8% of the most valuable third of homes. The imbalance was even more pronounced in some markets. In Atlanta, for example, 46% of low end home owners were underwater, compared with 10% of high end home owners. And in Baltimore 32% of low end home owners were in negative equity compared to 9% of those who own the highest value homes. ‘It's great news that the level of negative equity is falling, but what really worries me is the depth of negative equity. Millions of Americans are so far underwater, it's likely they may not re-gain equity for up to a decade or more at these rates,’ said Zillow chief economist Stan Humphries. ‘And because negative equity is concentrated so heavily at the lower end, it throws a real wrench in the traditional housing market conveyor belt. Potential… Continue reading
UK first time buyers now buy almost half of all homes with a mortgage
First time buyers in the UK account for almost half of all homes bought with a mortgage, a rise of 38% since 2011, new research shows. They make up 47% and are having to find a 6% higher deposit than a year ago but save when it comes to Stamp Duty, especially when buying in London, the study from the Halifax shows. Overall there were an estimated 139,500 first time buyers in the first six months of 2015, a 7% fall compared with the same period in 2014 and although this is the first annual decrease on this basis since the first half of 2011, it is still the highest total for the first six months of the year since 2007 and was 92% higher than the market low recorded in the first half of 2009. And despite the decline in purchases by first time buyers this year as a proportion of all mortgage financed house purchasers the proportion remains steady. Indeed, the number of FTBs has increased more rapidly than the number of subsequent buyers over the past few years, from 38% in 2011 to 47% in 2015. The average first time deposit in May 2015 was £29,894, 6% higher than in May 2014 and the report explains that this largely reflects the increase in house prices over the past year. The average first time deposit is now 82% or £13,494 higher than in 2007. Recent changes to stamp duty have saved the average first time buyer £716, reducing the tax bill for someone buying the average priced of £178,370 from £1,783 to £1,067. Savings for the average first time in London are much bigger than this with a reduction in the stamp duty bill for the average first property in the capital of £3,154. ‘There was a modest decline in the number of first time buyers in the first half of the year following the substantial increases recorded in 2013 and 2014. This fall has been in line with the general softening in market activity,’ said Craig McKinlay, Halifax mortgages director. ‘However, there are now signs of a pick-up in mortgage activity as the economy continues to recover and mortgage interest rates remain at very low levels. These factors could boost the number of first time buyers during the second half of the year,’ he added. The research also shows that the average price paid by first time buyers increased by 8% over the past year from £165,829 to £178,370, some 9% higher than in 2007 while in Greater London it is £342,313, more than £100,000 higher than the next most expensive region, the South East at £225,383. Northern Ireland is the least expensive region in the UK for a first time buyer with an average price of £104,240. The average deposit, as a proportion of the purchase price, has fallen from 20% in 2013 to 17% in 2015. It, nonetheless, remains significantly higher than in 2007 when it was 10%. First time… Continue reading
