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RICS sets out bold new vision for UK property market
The Royal Institution of Chartered Surveyors has proposed a new solution to solve the UK's chronic housing shortage including the introduction of a new land classification. There are a raft of recommendations in the Property in Politics report with the new classification called Amberfield which would create a pipeline of 'ready to go' land, increase housing supply and promote development opportunities. Under RICS proposals, Local Authorities and communities will have to work together to label sites favourable for development as Amberfield and each Local Plan will have to include a set quota of Amberfield, ready to be developed for housing. The quota is expected to be set between 30 and 50% but the framework and guidelines for each quota would be open to consultation in order to match the specific needs of each Local Authority and community. Amberfield sites would have to be developed within five years and therefore Local Authorities will be required to approve planning consent for Amberfield within a set time frame, otherwise the Authority would risk being classed as 'failing' under the RICS proposed OfPlan assessment. The new classification will enable local housing needs to be met and would create a five year land supply that works for communities and builders. The community will have better understanding of the planning process, more control over what is built where, and be able to see the long term development plan. While both brownfield and greenfield play an important role in the current planning system, both classifications block or slow development and local growth is being impeded by extensive battles to bring forward land. RICS says that Amberfield will speed up the process and take out cost for both developers and local authorities, enabling homes to be built faster on the agreed sites. It will provide certainty to investors, unlocking development opportunities, and will also encourage local infrastructure investment. The review of land classification, coupled with the other RICS recommendations, including Development Delivery Units (DDUs) and a nationwide housing zones programme, will cut through the bureaucracy barriers, speeding up housing delivery and encouraging cooperation across local authority boundaries, stitching together the regions. The RICS Property in Politics report is the result of the largest consultation ever undertaken by RICS, with property professionals from across England sharing insight into the biggest challenges currently facing housing, planning and development, construction and infrastructure and what actions a future Government should take to remedy them. ‘A new classification labelled Amberfield would speed up the delivery of appropriate housing stock. The housing market plays a fundamental part in the UK economy and adequate, affordable housing supply is vital to the UK's economic growth. The planning system needs to be responsive to the needs of customers and increased confidence is needed in which sites can be taken forward,’ said Jeremy Blackburn, RICS Head of Policy. ‘We would suggest a quota of 50% Amberfield for most Local Authorities as it would enable them to deliver the appropriate housing stock required, but it… Continue reading
New mortgage regulations hitting buyers with dependents and low incomes the most
Borrowers in the UK with dependents and on low incomes seeking a mortgage to buy a home have been the hardest hit by the new MMR regulations introduced earlier this year, new research shows. Lenders identified low income borrowers (85%), borrowers with dependents (77%) and self-employed or single borrowers (both 38%) as the three types of borrowers who have felt the biggest impact in terms of what they can borrow. Brokers felt borrowers with dependents have been the most affected (72%), followed by low income borrowers (60%) and self-employed borrowers (47%), according to the research by the Intermediary Mortgage Lenders Association (IMLA). Almost two thirds of brokers, 63%, believe significantly more borrowers are being turned down as a result of interest rate stress tests, but just 15% of lenders agree. The difference is likely to reflect the fact that while lenders are reporting on trends within their individual businesses, brokers working with multiple lenders have a view across the wider market. It may also be the case that brokers are advising some borrowers against submitting an application to lenders, based on a discussion about their finances and needs. However, both parties do agree that stress tests have had more of a direct impact on the amount consumers can borrow, compared with other changes to the MMR approval process. Some 79% of brokers believe interest rate stress tests have reduced the amount that can be borrowed, with over half of lenders, 55%, in agreement. More than one in three brokers, 35%, feel that stress tests have reduced loan sizes by more than 10%. Fewer brokers believe that more detailed income/expenditure assessments (58%) or evidencing requirements (42%) have had a direct impact on what consumers can borrow, although these numbers are still significant. Lenders report less of an effect with 45% believing income/expenditure assessments have reduced loan sizes, but fewer than 10% feeling evidencing requirements have had any effect. The majority of lenders, 71% and 58% of brokers believe that MMR will have a positive effect on consumers by improving the quality of advice they receive. Some 81% of lenders also believe the changes will improve consumers’ awareness of mortgage affordability and their related expenditure, with 61% of brokers agreeing. However, there are concerns over the implications on products, with 71% of brokers believing MMR will have a negative impact on sourcing mortgages. Reflecting this, 54% of lenders feel it will negatively impact product innovation and limit their capacity to develop new offers. ‘For many lenders, the MMR switchover has been more of a gradual shift than an overnight change. Even so, these are still early days and with processes being fine-tuned the real test will come beyond the six month milestone when we see if these effects have eased off or endured,’ said Peter Williams, IMLA executive director. ‘The fact that interest rate stress tests are having the biggest impact on borrowers shows they are doing their job by identifying those who would struggle to manage their repayments if rates rise…. Continue reading
Sales and prices in Canada continue upward but with considerable local variations
Home sales in Canada increased by almost 2% in August compared with the previous month and prices were up 5.3% year on year, according to the latest index from the Canadian Real Estate Association (CREA). Actual, not seasonally adjusted, activity stood 2.1% above August 2013 levels and the number of newly listed homes fell 1.2% from July to August. The 1.8% month on month sales rise marked the seventh consecutive monthly increase, and the highest level for sales since January 2010. Although activity rose in fewer than half of all local housing markets in August, the national tally was fuelled by monthly sales increases in Greater Vancouver, Calgary and Greater Toronto. ‘Sales picked up in some of Canada’s most active and expensive real estate markets which fuelled another national increase. Even so, the national increase in sales does not reflect local trends in many markets across Canada,’ said CREA president Beth Crosbie. CREA chief economist pointed out that sales activity in recent months has remained stronger than was anticipated earlier this year. ‘Listings and sales this spring were deferred due to unseasonably harsh weather, which subsequently supported activity once the delayed spring home buying season got into gear. This trend was reinforced by a decline in mortgage interest rates,’ he said. The boost from deferred sales is still expected to prove transitory. While national activity has yet to cool, sales were down from the previous month in the majority of Canada’s local markets, which may be early evidence that the transitory boost is fading. That said, low interest rates will continue to support housing affordability and sales activity,’ he added. The index also shows that year to date sales activity is up 4.3% compared to the first eight months of 2013 and remains in line with the 10 year average for the period. The actual, not seasonally adjusted, national average price for homes sold in August 2014 was $398,618, up 5.3% from the same month last year. But CREA points out that the national average price continues to be skewed upward by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s largest and most expensive housing markets. Excluding these two markets from the calculation, the average price is a relatively more modest $324,738 and the year on year increase shrinks to 3.9%. Year on year price growth in August picked up slightly for townhouse and terraced homes and apartments but slowed for one storey single family homes and was unchanged for two storey single family homes. Two storey single family homes continue to post the biggest year on year price gains with growth of 6.32%, followed closely by town house and terraces up 5.59% and one storey single family homes up 5.23%. Price growth for apartments remains comparatively more modest at 3.38%. Year on year price growth varied among local housing markets tracked by the index. As in recent months, the biggest gains were in Calgary with price rises of 9.83% followed by Greater Toronto at 7.82%… Continue reading
