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More needs to be done to boost UK’s new Help to Buy ISAs
The UK’s new Help to Buy ISAs are a step in the right direction, but much more must be done to help people renting taking their first step on the property ladder, it is claimed. According to Kevin White, head of financial planning at independent financial advisory group deVere, it is effectively free cash from the government and anyone who wants to buy their first home should take advantage. The new ISAs are available from 01 December and will enable first time buyers can save up to £200 per month and the government will add 25% on top of the savings. Savers need to save at least £1,600 to get the minimum bonus of £400. The most savers will receive the bonus on is £12,000, meaning £3,000 for five years of saving. ‘The overwhelming majority of Britons dream of owning their own home and this is a hugely positive step in the right direction to help people get on the property ladder,’ said White. ‘However, even with the maximum HISA saving plus the government bonus, meaning a total of £15,000, most first time buyers will still find that they’re £15,000 short for the average deposit,’ he explained. ‘With this in mind, much more must be done to help Generation Rent achieve their financial goals. Too many people in their 20s and 30s are desperately keen to leave their rented accommodation and/or their parents’ home and to buy a place of their own but simply can’t afford to do so,’ he added. He believes that the government, the financial services industry and consumer groups must unite to reignite the savings culture so that saving once again becomes Britain’s social norm. ‘It is our experience that many people do indeed want to save but are not in a financial position to put money aside. We believe this could be helped to be turned around with a three-pronged approach,’ said White. ‘First, we would urge the government to create a comprehensive savings charter. Government needs to make saving worthwhile by, for instance, offering more proper incentives, such as the HISA, and reversing existing and planned tax raids on pensions,’ he pointed out. ‘Second, the financial services sector could do more to help people get more from their savings. For example, it could make it easier to switch bank accounts, and also develop new, accessible and simple-to-use financial products and solutions to give today’s young people more options. ‘And third, we need the government, the industry and consumer to work more cohesively to educate people on the real importance of saving. We need to highlight the value of long-term security over short-term gratification,’ he added. He also pointed out that savings give people a buffer when things go wrong, they act as protection, and they also give people more life opportunities. ‘On a wider scale, a society that… Continue reading
UK private rented sector stable with voids at historic lows
The private rented sector in the UK is a stable market where yields have seen modest improvements and void periods, the average amount of time PRS properties spend unoccupied, are at historic lows. More than half of those landlords surveyed in the latest trends data report from Paragon Mortgages report steady tenant demand over the quarter, while 40% said tenant demand was either ‘growing’ or ‘booming’. The percentage of respondents expecting tenant demand to remain stable over the coming 12 months, or grow, has also increased from 85% to 89%. The latest data also shows that average yields have grown over the last three months from 6.3% to 6.4%. This improvement is in line with steady growth seen throughout 2015. In another key indicator of confidence that the PRS market will remain stable, landlords indicated that they expect yields to remain stable and maintain current levels over the coming 12 months. On the direct question of whether or not landlords intend to purchase properties over the coming 12 months, the figures again show a steady market, and a slight increase in optimism. Those intending to buy are up from 16.8% to 18.4%. Reflecting the overall stability of the market, however, landlords on average expect the number of PRS properties in their portfolio to be the same as they are currently in 12 months’ time. Void periods remain historically low at just below 2.6 weeks. This could be a reflection of the changing demographics of those choosing to live in the PRS. The most recent data shows an increase in the numbers of families with children moving into the PRS, and a corresponding decrease in young couples without children and single professionals. But despite the changing makeup of the tenant population, demand for longer term rental agreements remains relatively low, the research shows. These demographic changes also appear to be reflected in the ongoing buying intentions of landlords who are investing more in traditional family housing. On the question of how landlords view their portfolios compared with three months ago, levels have remained stable throughout 2015 and continue to do so in the latest data. Those feeling a little more optimistic are up by 1.6% and 58% report that optimism levels are unchanged since the last quarter. ‘This quarter’s results present a picture of a PRS sector that is neither booming nor contracting, but rather growing steadily,’ said John Heron, managing director of Paragon Mortgages. ‘There is room for improvement and it will be interesting to see, in future reports, if macroeconomic concerns about the stock market and the Eurozone, and changes in tax and regulation such as those recently announced by the Chancellor, have an impact on sentiment,’ he explained. ‘For the time being however, landlords are seeing steady growth and they expect to see this continue as demand for quality PRS accommodation remains buoyant,’ he added. Continue reading
House prices start seeing growth again in Scotland
House price growth in Scotland has quickened after a tempestuous year with prices up 1.4% year on year, more than double the 0.6% annual growth seen in the previous month. Month on month prices were up 0.5% taking the cost of an average home to £167,505, according to the Your Move house price index. Growth is yet to hit a third of the speed seen in September last year when annual growth was 5.4% but sales have soared to reach their highest rate for the month of September for eight years, up 10% on a year ago. Christine Campbell, Your Move managing director in Scotland, explained that usually there is a decline in house purchase activity between August and September, as a lagged effect of the summer holidays. ‘However, this month’s figures go against this trend. Despite other headwinds, this could be down to Scotland’s rising employment rate, increasing by 3,000 in the three months to September to 2,614,000 according to the ONS. With interest rates unlikely to change until 2017, low borrowing costs and near zero inflation should also help to pull up prices in the future,’ she said. Regionally, this means that 23 of Scotland’s local authorities have seen annual price growth, up from 22 last month. However, prices are still lower in seven of the nine most expensive local authorities, and Campbell said that the Land and Buildings Transaction Tax is still preventing the top end of the market from taking off. There have been fewer high value sales since the introduction of the tax. She also pointed out that if September’s pace of growth has been seen throughout the year it would translate to 6.2% annual growth but year on year growth is four times slower than the 5.4% recorded in September 2014. ‘Looking back at the past half decade, Scotland has seen the second lowest price house price growth across Great Britain. Only house prices in the North of England have risen slower. Scotland’s house price increases have been generally steadier, growing by a total of 4.3% over five years, an increase of £6,866. However, this house price growth is much more sustainable than the 26.7% total increase in Scottish house prices, seen between 2005 and 2010 when prices shot up by £33,826,’ said Campbell. But Scotland’s sales have bucked the usual seasonal trend, increasing 3% over the previous month, while sales in England and Wales fell by 1.5% over the same period. ‘In Scotland, sales will typically fall by 6% during this period which make the growth particularly significant. This month Scotland has had the strongest September sales since 2007, with 10% more sales this month than last year,’ Campbell added. Continue reading
