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UK buyers want a return to 100% mortgages
Half of home buyers in the UK would welcome a return to 100% loan to value mortgages to jump the hurdle of not being able to save a big enough deposit, a survey has found. The poll of 2,000 people reveals that half of those who plan to buy a home within the next two years are in favour of a relaxation of the lending criteria including 100% LTV mortgages. The research by lender and mortgage broker Ocean Finance also found that buyers of all ages want to see lenders offer zero deposit mortgages again, with those aged 25 to 34 most keen. 100% LTV mortgages disappeared as part of a major overhaul of the financial market that led to the Mortgage Market Review (MMR) being introduced in April 2014. The Review, the biggest piece of mortgage regulation in a decade, tightened the rules on the size of deposit required to get a loan. It also placed responsibility on lenders to ensure borrowers only get a mortgage they can afford. In practice, the new regulations have meant that borrowers face increased scrutiny about their income and spending, and often need to save large deposits to gain approval for a mortgage. ‘Buyers would welcome a return to 100% LTVs and many lenders would like to offer them,’ said Gareth Shilton, Ocean’s spokesperson. ‘Many people trying to get on to the housing ladder struggle to get enough cash together for a deposit, then house prices rise further, and they find themselves stuck on a never-ending treadmill,’ he pointed out. ‘The Mortgage Market Review states that lenders must ensure buyers can afford a mortgage. So it’s frustrating for those buyers who are able to prove they can afford a mortgage, but can’t raise a deposit because of their rent and living costs,’ he explained. ‘It would be a brave lender who is the first to go back into the mass market with 100% LTVs, although others would no doubt follow suit,’ he added. Continue reading
Scottish farm land market subdued but the best still sells well
Weak commodity prices, increased acres on the market and reduced subsides have subdued the Scottish farmland market yet, a new analysis report suggests. But the very best land has continued to achieve record prices, according to the latest data from real estate firm Savills. The statistics also shows that supply in Scotland was up by 23% this year in the 12 months to the end of September to 37,000 acres compared with the same period last year. ‘With UK farm debt at a record high, and prospects for improved commodity prices looking gloomy, more farms are likely to appear on the market in 2016 and this may have an impact on land values,’ said Luke French of Savills. ‘However with farmland supply at record lows, the fundamentals for why land is a good long term investment remain the same,’ he added. The Savills report says that there is a margin of around 20% to 30% between the average price per acre for prime arable land in England compared to Scotland and that is continuing to attract national interest in Scotland’s farms from those seeking to expand their farming businesses. Despite a good harvest in terms of yield, changes to the support system and continued poor commodity prices have created a tougher market, the report points out and units are taking longer to sell as more due diligence is undertaken and funding arranged. At the same time, it adds that buyers have become more discerning, resulting in a more fragile market and values out with local hot spots have plateaued across the board and are under pressure, as has been evident in some recent sales. ‘What is very evident is the resulting regional variation in average land values across all land types. Best in class continues to sell and sell well,’ said French. He gave as an in the Spring of 2015 in the lead up to the General Election in early May when Mains of Ravensby, a 190 acre arable farm on Angus, sold in five weeks after a highly competitive closing date, at a record price per acre. According to Savills buyers of Scottish farms continue to be predominantly farmers, many with funds from renewable projects and development land, in contrast to the English market where the lifestyle buyer has returned to the list of active purchasers in 2015. Continue reading
Extra stamp duty set to reduce number of lettings in UK, say agents
The extra stamp duty charge for the buy to let sector that begins next April has triggered a less optimistic outlook among letting agents in the UK. Some 40% are predicting that rental supply will decrease over the next five years, the highest rate this year, according to the latest report from the Association of Residential Letting Agents (ARLA). ‘This month’s findings are triggered the Chancellor’s announcements around buy to let tax in his Autumn Statement. We said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country,’ said David Cox, ARLA managing director. ‘The new stamp duty increases will make owning a buy to let property unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing a buy to let,’ he added. The ARLA monthly report also shows that tenants experiencing rent increases continue to fall, with 23% of letting agents reporting rent increases for tenants in November, down from 25% in October and the lowest in 2015 so far. Demand for rental properties increased marginally in November, alongside supply of available housing which was likely a result of tenants preparing themselves to find new rental properties in the New Year. ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October. Supply of rental accommodation also increased in November, rising by 9% from an average of 173 properties managed per branch in October, to 189 this month. However, renters in the capital will still struggle to find a property, with only 121 properties managed per branch, some 36% less than the UK average. ‘It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent,’ said Cox. ‘However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016,’ he added. Continue reading
