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UK residential mortgage market becoming too restrictive, study suggests
Renewed optimism in the UK mortgage industry for growth in 2015 is being overshadowed by the view that the market has become too conservative, it is claimed. Post financial crisis regulation is hampering the market and brokers are reporting difficulties in meeting customer needs, according to the latest research from the Intermediary Mortgage Lenders Association. While optimism is returning some 84% of brokers were unable to help at least one customer in the last six months, up from 78% in July 2014, the report points out. Products for the self-employed or those seeking to borrow into retirement are among those in short supply and people with low incomes or dependents have been most affected by reduced access to finance. Overall 74% of brokers took the view that market conditions are worsening, which is backed by 65% of lenders. It comes despite improving sentiment towards market conditions following a period of changes to lending criteria. IMLA’s previous research in July 2014 found 45% of brokers and 33% of lenders reporting that market conditions were worsening. This followed the implementation of the Mortgage Market Review (MMR) in April and with new macro-prudential controls on the horizon. Their pessimism has since softened with just 23% of brokers and 21% of lenders feeling the same way in January 2015. Some 51% of brokers, up from 41% in July, and 53% of lenders, up from 44% in July, now feel market conditions are currently improving. However, IMLA’s research reveals 84% of brokers were unable to source a mortgage for at least one client during the last six months, up from 78% who said the same in July 2014. A breakdown of the figures shows that 53% of brokers were unable to help a client with adverse credit, 53% were unable to help an interest-only borrower, 50% were unable to help a customer seeking to borrow into retirement and 46% were unable to help a client who was self-employed or had an irregular income. Overall, brokers and lenders both identify low income borrowers and those with dependents as the two consumer groups who have been most impacted by reduced access to finance following the MMR. Among the new rules, interest rate stress tests are seen to have had the biggest effect in reducing the amount people can borrow. More brokers and lenders report that the new rules are having an impact than was the case in July. Some 39% of brokers feel product availability has increased following the MMR, while just 18% feel it has reduced. Yet opinion is more evenly split on product flexibility with 27% of brokers feeling this has improved but 23% that it has not. ‘Regulation is vital to ensure that mortgage lending is safe and in proportion to consumer needs and the wider economy. But when families with dependents are among those who find themselves at a disadvantage, there are legitimate concerns that the pendulum has swung too far as a result of successive, incremental measures,’ said… Continue reading
Millions of home owners suffer damage to neighbour’s renovations, research shows
Some 3.7 million home owners in the UK have suffered property damage due to neighbour renovations in the last five years with only a third accepting responsibility for damages, new research shows. The repair bill for damages across the country totalled more than £1.5 billion with just 33% of neighbours accepting responsibility and 30% blaming someone else, according to the research from Direct Line’s SELECT Premier Insurance. Some 17% did not directly confront neighbours about damage to their property, surprising given that the average cost to repair damages was £533 and for 8% more than £1,000 was required to repair the damage. According to those whose damaged property incurred a cost to repair, the majority of their neighbours, 53%, shared at least half of the cost of repairs and 14% paid over 80% of the costs. However, 19% of neighbours paid nothing towards damages caused by their home makeovers. ‘In the UK we take pride in our homes with many seeing extending and renovating their homes as a way to improve their living standards. As such it is not surprising that in the 12 months to September last year we saw more than 55,000 residential planning applications made in England with more than three quarters of them accepted,’ said Nick Brabham, head of SELECT Premier Insurance. ‘If you or your neighbours are thinking about starting a home makeover project it is worth assessing and discussing the risk of damage to adjacent properties with neighbours. It is also crucial to check whether your home insurance policy covers damage caused by neighbour renovations, otherwise you could be left with a hefty repair bill,’ he added. Damage to fencing was the most common ailment for victims of over exuberant home transformation projects, with 43% suffering damage. A quarter of people highlighted damage to windows and damage to garden features such as fountains and sheds, making these the next most common casualties of neighbour renovations. Some 24% suffered damage to gates, 22% damage to roofs, 22% damage to plumbing include leaks, flooding and moisture, 21% damage to contents, 20% damage to plants, 19% damage to exterior walls and 17% damage to a driveway. Home renovations have also caused other annoyances to neighbours with 26% enduring noise disturbances and 14% experiencing reduced parking. This was a major issue in already congested London where 26% went through reduced parking whilst their neighbours renovated their properties. Continue reading
Prime central London transactions slowing but prices remain stable
The introduction of a new stamp duty propertytax structure in December, the forthcoming general election and the spectre of a mansion tax have created a level of uncertainty within the UK’s prime property market, it is claimed. New research from prime central London agency W.A.Ellis, a JLL company, shows a sharp reduction in prime central London transaction levels. The firm compared sales transactions within Knightsbridge, Chelsea, Belgravia and Kensington post code areas and found that transactions in January 2015 fell by 34% compared to a year ago. This reduction is most sharply felt within the house sector, with only nine sales occurring in January 2015, contrasting with 25 in January 2014, a reduction of 64% and the firm has seen a large number of houses being withdrawn from the market as discretionary sellers adopt a ‘wait and see’ more cautionary approach until after the election. The research also shows that while the transaction levels have dropped year on year, the average rate per foot of all the houses sold across the postcodes has remained stable at around £1,800 per foot. ‘Comparing year on year transactions within the same month only provides a snapshot, but the overriding sentiment at the upper end of the market is undoubtedly one of caution until the political path becomes clearer,’ said Richard Barber, director at W.A.Ellis. ‘At the lower end, however, we predict an increase in activity from the over 55s, releasing deposit monies from pensions to fund either buy to lets or investments for their children and we expect this to have a strong upward effect on the market between £200,000 and £1 million,’ he explained. He also explained that whilst the Mortgage Market Review (MMR) has had a curbing effect on the amounts that first time buyers can borrow, the so called bank of Mum and Dad is likely to subsidise the shortfall in mortgage funds, particularly as the market in equities and gilts is looking unpredictable. The firm’s research also shows that the prime central London lettings market saw a flourish of activity in the first week of January, followed by a steady stream of enquiries, viewings, and subsequent new tenancies. The firm forecasts that central London rents will rise 3% over the course of 2015. ‘January saw activity across the entire breadth of the market, with well-presented one and two bedroom properties letting with relative ease. Substantial houses gained much deserved attention, too, from families who have, no doubt, been hibernating over the Christmas period,’ said Lucy Morton, director and head of agency. She pointed out that demand for new build property, particularly in W2's prized Merchant Square development, is most definitely on the up, and the firm is seeing tenants’ expectations on quality of finish and furnishing increase considerably. ‘Stock levels remain high as many would be vendors with pre-election nerves opt to list their properties on the rental… Continue reading
