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Lending for homes falls in the UK, latest CML data shows
Home buying lending in the UK has started to decline amid concerns that mortgage regulation is having an impact on the market. The latest figures from the Council of Mortgage Lenders show that lending fell in August compared to July, the first month on month drop in house purchase lending volume since February this year. Lending fell across all sectors. First time buyer lending fell by 4% compared with July but it still 9% up on August 2013. Lending to home movers declined by 3% but is up 7% on August last year. Remortgage lending fell 4% month on month and is 11% down on the same month last year. Buy to let lending fell 13% but increased 11% compared to August last year. Total gross lending in August was £18.1 billion, some 8% lower than July when it was £19.7 billion, but 10% higher than August last year when it was £16.4 billion, according to the Bank of England. ‘The lending climate had a glass half full, glass half empty feel about it in August. On the one hand it saw a decline in all lending types month on month, which would suggest a levelling off of the market, with remortgaging remaining flat. Yet, on the other hand, we saw the highest August house purchase lending levels since 2007,’ said Paul Smee, director general of the CML. He pointed out that recent Bank of England Credit Conditions Survey expects an upward trend in remortgaging in the final months of the year and overall, these figures give no support to any fears of a developing bubble in housing. ‘This has been a year of major change, and the market has shown significant resilience and responsiveness to the changing environment, improving the availability of lending without compromising financial stability, as the Bank of England's assessment last week highlighted,’ he added. According to David Newnes, director of Your Move and Reeds Rains, the change is due to shifted lending conditions. ‘Securing mortgage finance is not a conundrum restricted to first time buyers, but is a considerable hurdle for landlords too. Demand for rented accommodation is climbing, and there’s little sign of this stopping,’ he said. ‘Secure house prices and spirited tenant demand are encouraging budding buy to let investors and existing landlords to add to the number of available homes to let. Balancing the asymmetry between supply and demand depends on the growing number of buy to let investors being able to acquire affordable mortgages, in order to broaden the pool of rental accommodation on offer and keep rent rises at sustainable levels,’ he explained. ‘The government and Bank of England need to ensure that any further regulatory changes do not lift lending out of reach for good applicants, and destroy growth at the same time. The benefits of more investment will be felt in tenants’ back pockets at the end of the month, as the strain of rent rises eases further,’ he added. Continue reading
Consultation launched in Scotland on tenancy reform
The Scottish Government has launched its consultation on tenancy reform, the first major overhaul of tenancy legislation in the private rented sector for 25 years. The New Tenancy for the Private Sector consultation aims to give tenants a greater sense of security, and provides appropriate safeguards for landlords, lenders and investors. Through the proposals landlords must offer a minimum tenancy of six months and the Notice to Quit will be linked to how long the tenant has lived in the property. It is part of the Scottish Government’s commitment to reform the private rented sector tenancy by enabling more effective regulation, applying tougher enforcement and attracting new investment. The document will consult on proposals to modernise the reasons a landlord can use to get back possession of their property; to enable tenants to stay in their home at the end of their lease unless one of the new reasons above occur; and introduce longer notice periods for landlords and tenants. It will also explore issues relating to rent levels. ‘If tenants have more security in their tenure, they may feel more confident in asserting their rights and flagging any concerns about their rented property without fear of eviction. In addition to this if tenants know they can only be asked to leave their home on certain specified grounds they will have a greater feeling of security,’ said Housing Minister Margaret Burgess. ‘But equally a new tenancy system provides an opportunity to improve the private rented sector for landlords. We can tackle some of the long standing issues they face, like problems around recovering the possession of their property and rent arrears. These changes could give landlords more reassurance in the system,’ she explained. ‘Housing is a priority for this Government which is why we are consulting on these proposals to make sure our private rented sector is a strong as it can be. Our vision is for Scotland’s private rented sector to be an attractive and affordable housing option for anyone who wishes to live in it,’ she pointed out. ‘Reforming the tenancy system is an important part of achieving this vision. By creating a new and simplified system we will have better property management, while tenants and landlords will be provided with more clarity and understanding of what the tenancy agreement means for them,’ she added. However the National Landlords Association (NLA) is questioning the viability of some of the proposals. The NLA is concerned that if implemented as proposed, there is a significant risk of undermining the private rented sector, and of exacerbating the housing crisis Scotland is currently facing. As the proposals will affect all landlords, letting agents and tenants in Scotland the NLA urges all involved to submit their views to the Scottish Government. ‘The consultation raises some interesting ideas for reform, but the Scottish Government seems to be considering worrying changes that would only undermine the private rented sector at a time when its role in housing provision has never been more important,’ said Richard Lambert, NLA… Continue reading
Prime property prices in Edinburgh up for fifth quarter in a row
Property prices in the Edinburgh City prime market rose for the fifth consecutive quarter between June and September despite a slowdown due to the referendum vote. Prices increased by 1.3% and are 4.9% higher on an annual basis and so far in 2014 transactions are 8% higher than a year ago, according to the latest report from real estate firm Knight Frank. Low stock levels and high demand are the main two characteristics which have typified the Edinburgh market so far this year and they have put upwards pressure on price. A snapshot of stock levels at the end of September reveals that there were 27% fewer properties available for sale than the same time last year. However, applicant numbers were 19% higher in 2014 to date compared to 2013 and viewings increased by 1% over the same time. According to Knight Frank, it is evidence of just how resilient the Edinburgh property market has been this year in spite of the uncertainty surrounding the outcome of the referendum. Indeed, agents reported activity only noticeably slowed in the three week period before the vote. Since the result was announced activity has returned to more normal levels, suggesting that at least for now it is back to business as usual. The result means there is now a more certain environment for the property market to function and it is expected that this, combined with growing consumer confidence, should act as a further boost for the city’s already robust prime market. ‘While the flurry of activity that was predicted in the event of a No vote hasn’t materialised yet, we have dealt with a number of buyers and vendors who put off making decisions until after the vote,’ said Edward Douglas-Home, head of Edinburgh City sales at Knight Frank. ‘The recent figures highlight just how buoyant the Edinburgh market has been. Premiums have been paid for the very best homes in the best locations and high demand from would-be buyers is evident across the market. We expect that activity will continue to pick up in the coming months,’ he explained. However, despite the optimism in the market, the market has more hurdles to clear, most notably the ongoing negotiations between Holyrood and Westminster concerning further devolution and the upcoming May 2015 UK general election could create more uncertainty, especially when it comes to tax changes affecting high-value residential property. Additionally, from April 2015, Stamp Duty for Scottish residential and non-residential property sales (SDLT) will be replaced by a new Land and Buildings Transaction Tax (LBTT), which will be administered and collected within Scotland. Guidance surrounding the final rates will be provided this month, but it is expected that buyers of more expensive homes will have to pay more tax up front when purchasing a property. Meanwhile, the No vote in the referendum could Now that the uncertainty of the referendum is over there could be a rise in the number of people from London who would rather own property in Edinburgh and commute,… Continue reading
