Tag Archives: real estate
UK buyer deposit now at lowest level for six years
Raising a deposit, which has been the single biggest barrier to home ownership in the UK since 2010, is now at its lowest level for six years, new research shows. However, it still presents a barrier to over half of consumers with 52% saying it is a hurdle to overcome, according to the latest Property Tracker report from the Building Societies Association (BSA). But it points out that this figure is down from 59% in September 2015 and lower than the high of 69% recorded in September 2011. From September to December 2015, access to mortgage finance as a barrier to home ownership dropped from 41% to 38%. The affordability of monthly mortgage repayments fell from 35% to 33% and lack of job security is now at 26%, down from 28%. The BSA says that results indicate that people are feeling reasonably confident about home ownership as an option for them. This could partially be as a result of the focus on housing in the Autumn Statement in November and is evidenced by the strong lending by building societies and other lenders across the market this year. ‘This snapshot of sentiment in the housing market shows that consumers are feeling reasonably optimistic about getting on or moving up the property ladder,’ said Paul Broadhead, BSA head of Mortgage Policy. ‘Awareness of Government schemes, such as Help to Buy and the new Help to Buy, London plus the availability of higher loan to value mortgages helps to bring choice and competition to the market. Housing generally needs to remain a top priority for the Government,’ he pointed out. ‘Now is the time to focus on building more homes, supported by appropriate investment in infrastructure, in order to begin to address the long term imbalance of housing supply with demand,’ he explained. ‘Innovative mortgage products and intermediate forms of tenure must also be championed, not just by building societies, but by all lenders, the regulators and government. This will go some way to delivering a sustainable housing market which caters to the needs of a wide range of credit worthy consumers, not just those with ‘vanilla’ borrowing requirements,’ he added. Continue reading
Stamp duty increase for UK landlords equivalent to 11 months net income
The cost of the new 3% stamp duty rate for UK landlords announced recently in the Autumn Statement would be the equivalent to 11 months income for the average mortgaged landlord, new research has found. It is suggested that most private sector landlords buying after April 2016, when the measure is introduced, will likely try to offset the cost by offering less when purchasing. It comes at a time when the rent on newly let properties has increased by 2% year on year, led by markets in the East of England, according to research by property services group Countrywide. In the Autumn Statement, the Chancellor George Osborne announced an additional 3% stamp duty rate for landlords and second home owners. The research also suggests that the rate will put pressure on yields for landlords, unless they account for increased costs when buying. Indeed, the research shows that if the higher tax burden is not factored into the purchase price of a property, it would mean a reduction in gross yield of 0.2%. That is equivalent to 11 months income for the average landlord, taking into account borrowing costs, based on the average loan to value of 68%. Landlords in the South West and North East of England will see the highest cost relative to rental income, as the extra tax burden is equivalent to 14 months and 12 months of income, respectively. Those buying in the North West of England will see the least, with the extra stamp duty equivalent to eight months of income. The majority of landlord purchases take place in London, the South and East of England and some 60% of homes sold to landlords in England this year were in these regions. Landlords in these areas will see the biggest cash increase in stamp duty, £6,000 on average. However, high expectations of future house price growth will likely mitigate some of the impact of the tax increase. If prices grew at the same rate as the last five years, within 12 months the growth in house prices would have offset the cost of the additional stamp duty. In the Midlands and North of England, 16% and 12% of total sales respectively are to landlords. Countrywide data shows that the average property bought by landlords in these regions would previously not have faced any stamp duty but will now face a £3,200 tax bill next year. The changes to stamp duty come as the shortage of homes available to rent continues, levels of stock have decreased 5% year on year. The growing imbalance between supply and demand will continue to support rent increases in future months as tenants compete for fewer homes. ‘The stamp duty increase will impact landlords’ purchasing power. Many entering the market will be faced with a choice between making a lower offer when buying or having to cover the additional costs themselves,… Continue reading
First time buyer valuation activity up by over 30% year on year
First time buyer activity in the UK jumped in November to a rate 31% higher than in the same month last year and up 2% month on month. The data from Connells Survey & Valuation also shows that first time buyer valuations were 2% above the annual increase for the overall housing market and 26% greater than the year on year increase for home mover activity. According to John Bagshaw, corporate services director of Connells Survey & Valuation, many first time buyers may be eager to get on the housing ladder now to avoid any potential rate rise by the Bank of England in the New Year. ‘While any increase to the base rate will likely be slight, it could be enough to persuade cash limited and price sensitive first time buyers to act sooner rather than later,’ he said. He believes that first time buyers are also looking to take advantage of Government backed schemes such as Help to Buy while they last. ‘Although the Government has given no clear indication these packages will end anytime soon, they could be gradually phased out as housing market confidence continues to improve,’ he explained. ‘These two factors are reinforced by an economy that currently boasts a golden combination of growth, low inflation and rising household incomes, an appealing economic environment for typically cautious first time buyers,’ he added. The data also shows that the buy to let market experienced similarly strong, if less pronounced, annual growth, with activity in the sector up 26% between November 2014 and November 2015. The strong performance comes despite the market contracting slightly by 4% on a monthly basis. Valuation activity for all purposes also remains strong, climbing 29% between November 2014 and November 2015, while registering no change compared to last month. ‘The buy to let sector continues to be an attractive proposition for property investors. But while the prospect of high returns is driving some of the activity in this sector, much of the energy is also being fueled by a desire to out manoeuvre the Treasury’s attempts to take more money from buy to let business,’ said Bagshaw. ‘With the Chancellor imposing more fees and regulations on landlords in his most recent Autumn Statement, many would be landlords are hurrying to get into the market before these changes kick in from April next year,’ he explained. He also pointed out that the housing market’s overall performance remains positive. All sectors are reporting healthy yearly growth and he said this is a reflection of a positive combination of economic growth, rising consumer confidence and improving real terms wages. The remortgaging market continues to expand rapidly on an annual basis, with the number of remortgaging valuations carried out in November 2015 representing a 46% increase on November of last year, while also representing a 5% increase on October 2015. However, progress for the home mover market was more gradual. Valuation activity for those seeking to progress further… Continue reading
