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Row breaks out over issue of retirees downsizing in the UK
Older home owners in the UK should not be forced to downsize just to let the younger generation onto the housing ladder. Saga, a services and advice provider for people aged over 50, has hit out at remarks attributed the Financial Conduct Authority, the UK’s financial watchdog, that retired people should not continue living in properties that are too big for them. Lynda Blackwell, head of mortgages at the FCA, is reported to have told Ministers that they need to address the situation in the UK where retired people continue living in the family home once their children have left. She explained that the current housing shortage could be addressed by these so called ‘last time buyer’ moving to smaller properties to free up homes for people lower down the housing ladder. But Saga believes it is a form of bullying. ‘If people have saved and paid for their house over their working lives, it's down to them if they want to fill it with family or live on their own,’ said Saga’s director of communications, Paul Green. ‘But setting the generations against each other or talking about tackling older home owners is not just unhelpful it's insulting,’ he added. He explained that recent research carried out by Saga in association with Wadswick Green retirement village clearly showed that two thirds of older home owners would like to consider moving home ready for retirement but are prevented from taking that step either because there aren't sufficient appropriate properties to move to, or the costs to move far outweigh any benefit from doing so. ‘One of the solutions Saga has researched is allowing one stamp duty free move for those rightsizing for retirement which, according to independent economists CEBR, would release 111,000 family homes onto the market,’ said Green. ‘This is a win for older home owners who want to downsize, but also for younger families that want to move up the ladder and also for the exchequer. The research shows that by giving this tax free move it would be counterbalanced by an estimated £461 million of stamp duty that would be generated by the house sales that might otherwise not have taken place,’ he explained. ‘If we want to tackle the housing crisis we need to do so holistically. First time buyer schemes for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step. The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage,’ he added. Continue reading
UK landlords left fuming over new smoke alarms laws
Landlords in the UK have criticised what they claim are unnecessary delays in the introduction of legislation which will make it compulsory to install smoke and carbon monoxide alarms in private rented homes. Draft regulations were published earlier in the year to require private sector landlords to install at least one smoke alarm on every storey of their rental property from 01 October 2015, providing local authorities with the power to fine landlords who fail to comply £5,000. However, the UK’s upper house of parliament, the House of Lords, has rejected the draft legislation at is final stage on the basis that the proposed introduction is less than three weeks away, that the government has not done enough to inform landlords of the changes, and that the legislation is poorly worded. The British Property Federation (BPF), which represents residential landlords and has supported the draft legislation, has warned that by the time the legislation is approved, landlords will be left with mere days to comply with the legislation, risking the £5,000 fine. The BPF has issued further concerns that information about the impending change in legislation has been poorly disseminated, and that many landlords may even be unaware of the changes and the potential fines. ‘We have been fully supportive of the campaign to make smoke alarms compulsory in private rented properties, and are therefore extremely disappointed to see this unnecessary delay in proceedings,’ said Ian Fletcher, director of policy (real estate) at the BPF. ‘The original timeframe for the legislation was tight, but allowing time for a further debate in the Lords is going to make this even worse. Coupled with the fact that there has been no publicity on the changes, we are worried that many landlords are going to be caught out by the fine as a result of government’s disorganisation and lack of clarity,’ he explained. ‘It is particularly frustrating that one of the reasons that this revocation has happened is because the introduction is worded poorly, as there has been no consultation on this,’ he added. Richard Lambert, chief executive officer of the National Landlords Association (NLA), described the situation as ‘farcical’. ‘These regulations are poorly worded, badly timed and being tabled with just days to spare before they are due to come into force on 01 October,’ he said. ‘As we understand it, there will be no guidance from the Government explaining how to comply before then. How can a landlord about to let a property on a tenancy from the start of October be expected to comply with these new requirements if they’ve not been told what they are and what is expected,’ he pointed out. ‘Given that there is no Government budget for marketing these new laws, and so it is relying on industry organisations and professional advisers as the main route to compliance, it’s shoddy, to say the least,’ he added. Continue reading
First time buyers in UK need bigger deposits despite Help to Buy scheme
First time buyers in the UK need a £32,000 deposit to buy their first home as average deposits rise to their highest level in a year, new research shows. Despite Help to Buy providing those with small deposits access to high value LTV mortgages, lending is actually decreasing with the average deposit size up from a low of 16% in October last year to 20% or £31,807 now. The analysis found June’s average deposit of 20% to be the same figure as two years ago) before Help to Buy was introduced. Factoring in house price increases over the last two years also means that in monetary terms, the average deposit has risen by 9%, or £2,557, up from £29,250. The Genworth/Moneyfacts study also shows that current average deposit size is equal to 81% of an average first time buyer’s annual income of £39,065 highlighting the difficulty faced in saving such a substantial amount. Across all buyers, the average LTV for house purchase loans also dropped by 2%, from 77% in May to 75% in June. An average deposit of 25% is therefore required as access to high LTV lending impacts not only first time buyers but also those hoping to move up the property ladder. The research also shows that limited access to high LTV lending across all mortgages heightens the challenge for first time buyers in fulfilling their ambitions of home ownership. The study suggest that already a lack of housing supply is crippling the first time buyer market and making it harder for people hoping to move up the property ladder also means that typical first time buyer properties are not being freed up as often as they should. The price gap between 75% and 95% LTV mortgages has narrowed since the start of the year as a result of lower interest rates over the last few months. In January 2015 the price differential was 71% but has since fallen to 69%. However, this remains very high and means those who are unable to save for a larger deposit are faced with charges 69% higher than those who have access to a 25% deposit. On an average first time buyer property of £159,053, those with a 25% deposit pay a monthly fixed payment of just £500, compared to £846 for those with a 5% deposit, a difference of £346. Similarly, the fixed term cost for buyers with a 95% LTV mortgage is £20,307 and just £12,000 for those with a 75% LTV mortgage, a difference of £8,307 or 69%. The report says that as further evidence of the dominance of low LTV lending, the number of products available for those with larger deposits grew faster than the number of new high LTV products; the number of available products at 75% and 80% LTV rose by 280 and 200 respectively in the year to August… Continue reading
