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Research reveals concerns about new mortgage rules in UK
More than half of people who are either considering, or are in the course of applying for a mortgage in the UK believe that the obligation placed upon mortgage lenders to assess their ability to repay will slow down the application process. Overall 59% are in this position and 32% of those who have yet to apply also said they would find it fairly difficult to obtain evidence of all the expenditure information they believe a lender needs to assess a mortgage application. The research from Equifax, a credit information provider, also found that 69% who responded to the survey expressed concern that more detailed affordability checks would affect the amount they could borrow and 40% are worried about the time it will take to complete their mortgage application. The new responsibilities placed upon lenders, which came into effect in April 2014 as a result of the Mortgage Market Review, place even greater onus on the lender to assess an applicant's ability to repay. The applicant's credit history is likely to play a crucial role in that assessment, alongside other information gathered as part of the application process. ‘It is important to remember that lenders will take into account the information provided on the application form and will look at an applicant's income and outgoings to ensure they can afford the mortgage they are applying for, now and in the future. However, our research suggests that 22% are still unconvinced that the new affordability rules will help prevent home owners overstretching themselves in the long term,’ said Laura Barrett of Equifax Consumer Affairs. ‘We would recommend compiling any financial documents and expenditure information needed to support a mortgage application, as soon as the application process starts. Advance preparation will hopefully avoid any unnecessary delays,’ she pointed out. ‘A lender will typically look at an applicant's credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, it is suggested that individuals check their credit report before making any applications to ensure that it is in the best possible shape for them,’ she added. Continue reading
European commercial property investment market seen as attractive
The European commercial property investment market enjoyed a strong end to 2014, according to the latest quarterly report from Knight Frank. It says that the outlook for 2015 has been boosted by the European Central Bank’s (ECB) announcement in January of a programme of quantitative easing which will help to maintain the attractive yield premiums offered by property over government bonds. Overall a total of €57.9 billion was invested in European commercial property in the fourth quarter of 2014, making this the strongest quarter since the second quarter of 2007 and investment volumes for the whole of 2014 came to €177.6 billion, 21% up on 2013. The firm says that investors have continued to show an increased appetite for risk, targeting a wide variety of non-core locations and sectors. Investment volumes increased strongly in Spain, Ireland, the Netherlands and the UK regions throughout 2014, while the Portuguese investment market finally revived in the final quarter of the year, having been one of the last of the peripheral markets to show signs of recovery. The report explains that the current strength of the investment market comes in spite of more modest and varied trends in European occupier markets. In 2014, office take up increased in markets such as London, Paris and Berlin, but fell in Frankfurt, Vienna and Moscow. However, the Knight Frank European Prime Office Rental Index rose by a modest 0.8% in the fourth quarter with London, Dublin and Lisbon being the only major markets to record increases in prime office rents. ‘The European investment market has continued to gain remarkable momentum. We expect 2015 to be another strong year, bolstered by the ECB’s QE programme,’ said Matthew Colbourne, international research associate at Knight Frank. ‘By leading to falls in European government bond yields, the QE announcement has further widened the spreads between property and bond yields. It will help to preserve the attractiveness of property as an asset class in 2015 and beyond,’ he added. Continue reading
Demand for property in City of London pushes up home prices
The City of London and its surrounds are now firmly part of the prime central London residential property market as increased job creation, coupled with strong buyer demand, has underpinned property price growth. In fact, a number of economic and cultural factors have transformed the areas surrounding the City of London into some of the capital’s most active prime residential areas, according to a new report from real estate firm Knight Frank. Its latest analysis shows that transaction levels in the area, which runs from Farringdon in the West to Whitechapel in the east, were 19% higher in 2014 compared to 2012, and 42% higher than in 2011. ‘Growing demand has underpinned price growth, which has outperformed prime central London over the last three years and demand for housing has also been spurred by the relative value that is on offer, in terms of price per square foot, compared to the more traditional prime areas,’ said Oliver Knight of the firm’s residential research team. The report points out that the area benefits from existing high quality property stock including Georgian terraces as well as period commercial buildings, some of which have already lent themselves to conversion into large scale, open plan residential buildings not dissimilar to Tribeca in New York. The northern central quarter encompasses City Road, Old Street and Shoreditch and to the south it runs through the City of London as far as Tower Bridge and the outskirts of Midtown. The area boasts a wide cultural offering which includes Smithfield Market, Columbia Road Flower Market, Whitechapel Art Gallery and Brick Lane. Proximity to these, as well as a host of other landmarks, has helped contribute to rising demand from buyers for property in the area. In addition, the report points out that the evolution of new commercial areas has bought many thousands of new workers to the area, acting as a further boost to demand. This has tempted developers to tap into a need for supply of new residential space. ‘The activity in the area, in economic terms as well as development, is also helping to feed the demand for property. The fact that the City and its surrounding areas will be served by three Crossrail stations at Farringdon, Liverpool Street and Whitechapel, with extra station entrances at Barbican and Moorgate, is only likely to add to its appeal to both commercial and residential occupiers,’ explained Knight. ‘We expect that the mix of development, job creation and regeneration in the area means that its draw to homebuyers and investors is likely to continue to grow in the coming years. Further improvements to infrastructure and continued re-generation of the area will result in new amenities being delivered, as well as improvements to the public realm. This is likely to increase buyer demand for residential property in the area and could underpin future price rises,’ he said. The report also explains that transport is a key factor as it not only strengthens… Continue reading
