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Younger UK home buyers think they will still have a mortgage into retirement
A new survey has found that around half of 25 to 34 year olds in the UK believe they may need a mortgage that lasts into retirement and are concerned they won’t be able to get one. Some 27% of people in this age group also think they may struggle getting a mortgage into retirement because their credit history, income level or age will count against them, the poll from the Building Societies Association says. ‘We are all now living much longer and getting on to the property ladder later in life. Many younger buyers are realising that they may not be able to pay off their mortgage until after they retire. As the average age of a first time buyer increases, borrowing into retirement is becoming the new normal, rather than a niche form of lending,’ said Paul Broadhead, head of mortgage policy at the BSA. He also pointed out that the Mortgage Market Review, introduced just over a year ago, has had an impact on borrowing. ‘The application process is much more rigorous and borrowers now have to contend with strict affordability assessments that factor in other commitments,’ he explained. ‘This means they may have to borrow over a longer term to secure a mortgage. These demographic and regulatory changes mean some borrowers may find their mortgage application is rejected if they need to borrow into their anticipated retirement. The mortgage market needs to change to cater for this shift in borrowing,’ he added. However, he also pointed out that despite the concern shown by younger home buyers, it isn’t all doom and gloom. ‘The building society sector tends to be more flexible and willing to offer mortgages that extend into retirement,’ said Broadhead. ‘ Some societies do not have upper age limits, tend to take the case by case approach to applications and are keen on developing long term products that cater to first time buyers who may want or need to borrow into older age. The sector is also keen to debunk the myth that once you are over 40 you are too old to get a mortgage,’ he added. ‘Given that the population is aging and house purchase later in life is more common, the Government, regulators and the financial services sector needs to cater for this change. Paying off a mortgage by the age of 65 is no longer a reality for many,’ he concluded. Continue reading
House prices drop in Scotland due to new property tax bands
House prices in Scotland fell 1.6% in April, the largest monthly fall since 2009, but sales were up 18% month on month and are 4% higher than a year ago. It means that prices fell £3,000 in April taking the average house price to £184,970 but prices are still 14.6% higher than in the same month in 2014, according to the latest Your Move/Acadata monthly index. The index report points out that much of the change could be due to the introduction of the new Land and Buildings Transaction Tax (LBTT) in April which saw a lot of sales in the higher price brackets pushed through to avoid paying a higher level of property tax. Indeed, buyers rushed through 83 sales in the £1 million plus sector in March, compared to an average of 12 in a typical month, to beat higher tax. Some 46 were sold in just three days, but no million pound homes were sold in April. The most significant monthly downturn was found in East Lothian, where values dropped 7.2%. The islands of Orkney, Eilean Siar and the Shetlands saw the highest price increases during the month, of 9.1%, 4.8% and 4.4% respectively. Property values also reached a new peak in the Scottish Borders, Highland, and West Dunbartonshire in April. While year on year the biggest increase in prices has been in Edinburgh with growth of 25.5%. ‘Reforming Scottish stamp duty was always going to ruffle a few feathers in the market. After a spectacular 9.4% leap during March ahead of the LBTT, average Scottish house prices subsequently fell by the sharpest fall we’ve seen since March 2009, when the housing market was at the lowest ebb of the housing crisis,’ said Christine Campbell, Your Move managing director in Scotland. ‘The Scottish housing market put on a high-octane performance in March, as high end buyers raced against the clock to snap up million-pound property before the higher rates of stamp duty came into play. This magnified the average price paid in March, but now the market is re-focusing,’ she explained. She pointed out that the drop in prices has cooled annual growth, which slipped from 16.3% in March to 14.6% in April. ‘However, with double digit growth still pervading, the housing recovery doesn’t appear too shaken, and this short-term hiccup has been concentrated in higher priced areas,’ added Campbell. The data shows that there were 8,203 home sales during April, and overall, Scottish sales in both March and April have grown on 2014 levels, bucking the trend across England and Wales, where sales have been consistently falling behind on a yearly basis over the past six months. The figures also show how the change in stamp duty in Scotland has clearly accelerated purchasing decisions to the beginning of the year. For instance, there were 237 more homes sold in Edinburgh during the first quarter of 2015 than the first quarter of last year, of which 130 were larger, detached properties…. Continue reading
British landlords urged to check tenancy deposits ahead of June deadline
Landlords in the UK have until later in June to comply with new legislation on tenancy deposits which clears up confusion created by a loophole in the law. Tenancy Deposit Protection schemes have been in place since 06 April 2007 but a court ruling said that any tenancy which began before that date but was renewed or became a statutory periodic after that date was deemed to be a new tenancy and therefore the deposit had to be re-protected. This created confusion as legally deposits that had been correctly protected suddenly became unlawful. This has now been addressed by the Deregulation Act 2015 which came into force in March requiring all landlords to comply by 23 June so that all tenancies are protected under one of the government authorised schemes. For deposits taken before the 06 April 2007 and where the tenancy became periodic prior to this date, landlords and agents aren’t required to protect the deposit however, they won’t be able to serve a section 21 notice to regain possession of the property unless the deposit is protected with a tenancy deposit scheme. The Association of Residential Agents (ARLA) is urging all landlords to check that they comply with the regulations before the deadline. If landlords fail to comply they could be liable for sanctions which include a potential claim by the tenant for compensation of up to three times the amount of the deposit paid and find themselves unable to bring a tenancy to an end through a Section 21 notice. The protection of tenant deposits is always a hot topic in the private rented market and something that often causes the greatest amount of disagreement between tenants and landlords. Following a number of high profile court cases where landlords have been challenged by tenants for up to three times the deposit amount and on the enforcement of notices to quit, there is now greater clarity on what landlords should and should not do. ‘The new Act provides clarity on the tenancy deposit protection regulations in practice, especially with regard to whether the pre 06 April 2007 deposits fall under the protection rules. The onus is on landlords to adhere to the new rules and ensure they’re compliant,’ said Fran Mulhall, regional operations manager at property rental specialists GFW Letting. ‘I think the deposit protection ruling from the Act can only be seen as a positive change, however I think there is a danger of detrimental effects that the Act might unintentionally encourage, relating specifically to the Section 21 notice to quit. The Deregulation Act has altered the rules regarding serving notice to quit, namely the timing in which the notice can be served and the period of notice required to be given to the tenant,’ Mulhall pointed out. ‘Landlords who had been served with a local authority improvement notice for failing to carry out repairs requested by the tenant within a timeframe could fall foul to the… Continue reading
