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House lending in UK expected to grow in 2015 and 2016, but more slowly
The Council of Mortgage Lenders (CML) has issues a confident outlook report for 2105 and says it expects mortgage lending to grow in the next two years but more slowly than this year. Gross and net lending of £240 billion and £38 billion respectively in 2016 would nevertheless represent the strongest performances since 2008 and it adds that a gentle upward trajectory for the mortgage market going forwards should calm macro-prudential concerns. ‘The proportion of cash financed transactions has shown signs of stabilising in 2014, and may decline gently as mortgage availability continues to improve. Prospects for economic growth, job creation and a pick-up in earnings are relatively positive, and these factors, along with the easing in interest rate expectations over recent months, should underpin housing market sentiment,’ the report explains. It also welcomes the form of stamp duty announced by the Chancellor George Osborne in his autumn statement and said that this will also benefit lending activity in the short term. However, it also points out that housing market activity has nudged lower since the summer but this is consistent with the long standing view that affordability considerations would limit the scope for transactions to return to longer-run norms. ‘We expect the pace of house purchase in 2015 and 2016 to be a little below this year’s level,’ it adds. When it comes to buy to let, the CML says lending in this sector should continue to make some headway, although this may be limited by uncertainties about the appetite to regulate it or the activities of landlords more generally. Some further improvement in mortgage arrears and possessions is possible in 2015, before a relatively modest reversal as interest rates increase gently through the second half of our forecasting period. Ales could fall. ‘Reflecting the uncertainties about wider economic developments and housing activity beyond the next few months, we think that transactions will ease back modestly in 2015 and thereafter broadly settle,’ the forecast points out. It also points out that cash based transactions have grown in importance to account for more than a third of market sales, with the reduced availability of mortgage credit following the credit crunch. The cash proportion of sales peaked at nearly 36% in 2013 and in 2014 as mortgage credit availability has improved, mortgage financed transactions have grown at more or less the same pace as cash transactions, and so the latter’s proportion has remained fairly steady. ‘Looking ahead, we anticipate that cash transactions will progressively edge back down nearer to a third of sales, and so to a limited degree allow for a softer decrease in the volume of mortgage financed sales than for the overall market,’ the report adds. With typical loan size echoing some further modest increases in house prices, the CML expects the value of lending for regulated house purchase to move a little higher to about £120 billion in 2015 compared with £115 billion in 2014. ‘We have pencilled… Continue reading
Many UK landlords unfamiliar with new immigration checks
UK landlords do not fully understand the new immigration checks they are being required to undertake and those already doing so are not happy about it, new research shows. Landlords in the West Midlands are already compelled to check the immigration status of would be tenants under a pilot scheme that is set to be rolled out across the country next year. However, as study, conducted by online letting agent PropertyLetByUs, has found that nine out of 10 landlords don’t fully understand the immigration checks and a further nine out of 10 landlords believe that the new immigration legislation places too much responsibility on them. The research also reveals that 100% of landlords intend to rely on their letting agent or reference agency to conduct the checks and 93% of landlords don’t feel confident making the checks themselves. What’s more, over a quarter of landlords think that the legislation will lead to a rise in unscrupulous landlords renting ‘beds in sheds’, a fifth believe it will make it much harder for immigrants to find a property to rent and 10% of landlords think the new legislation will cause homelessness for some immigrants. The vast majority of landlords say they will be much more wary about taking on immigrant tenants. ‘It is clear that landlords aren’t comfortable with the legislation and will be relying on letting agents and reference firms to help them comply with the new rules,’ said Jane Morris, managing director of PropertyLetByUs. ‘The pilot in the West Midlands will hopefully iron out many of the issues and that when the new rules are rolled out nationally in 2015, landlords will feel more comfortable with what is required of them,’ she explained. The firm points out that it is important that landlords prepare themselves for the new ‘right to rent’ checks, as any non-compliance will mean that landlords could face a £3,000 fine. The Immigration Act requires landlords to check whether prospective tenants are in the country legally. Landlords will have to see ‘evidence’, for example a passport or a biometric residence permit, an official form of identification provided by the Home Office. The new rules will require landlords to check whether potential tenants and occupants over 18 have a ‘right to rent’ before entering into a new tenancy agreement. All adults who will occupy the property as their main home, not just named tenants, should be checked. If they turn 18 during the tenancy, no initial or follow up checks are required. These rules apply to new tenancies only. Renewals are excluded if all parties remain the same and there has been no break. ‘The Home Office will carry out checks on individual properties and landlords if they receive information from a workplace, a raid, a tip-off from neighbours, follow up on an immigration application and/or if the landlord has been identified as… Continue reading
Rapid price growth slowing in many US markets, latest index shows
Rapid property price growth in the US continued to level off in the second half of 2014, but markets hardest hit by the recession are still seeing double digit value growth, the latest data shows. Cumulatively, US homes will be worth $27.5 trillion at the end of 2014, a 6.7% increase overall, according to the latest data from real estate firm Zillow. In November national home values continued to rise at an incrementally slower pace and are up 6% from last year, the third consecutive overall increase. Homes lost $6.1 trillion in value between December 2006 and December 2011. The cumulative increase in home values is slightly smaller than the 8% recorded in 2013 and that kind of gradual slowing is a sign of the times as the market heads for slower expected gains in 2015. Over the second half of 2014 inventory increased in many US markets and, with more homes on the market, home value appreciation slowed. ‘Looking at the total value of the US housing stock proves just how huge and important the housing sector is to the overall economy,’ said Zillow chief economist Stan Humphries. ‘Virtually nowhere else will you see gains of more than a trillion dollars in one year represent only single digit percentages of the total market. As we conclude 2014 and look ahead at 2015 and beyond, housing will play a bigger role in the broader economic recovery,’ he explained. ‘As the job market improves and more households form, more people will search for homes to buy and rent, which will translate into more people buying appliances and home goods and lead to more jobs for home builders and contractors. Housing is well positioned to continue the great strides already made this year,’ he added. Looking ahead, as more homes come on the market, growth in home values is expected to slow to 2.4% in the next 12 months, according to the Zillow Home Value Forecast. There were 11.8% more homes for sale in November 2014 than a year prior, but inventory fell slightly in many major markets from October to November. Among major markets, home values were up the most year on year in Miami with growth of 13.6%, up 12.8% in Atlanta, up 11.9% in Houston, up 11.9% in Orlando and up 11.5% in Las Vegas. Values were higher than last November in almost every major US metro and national rents were up in November from a year ago by 3.4% to $1,342. Continue reading
