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UK expands shared home ownership scheme
The UK government is to make it easier for young couple to get in the housing ladder by expanding the right to shared ownership. Prime Minister David Cameron said that tens of thousands of young couples will be helped by reforms to existing part buy, part rent schemes. The policy should see 175,000 more aspiring home owners being able to buy a stake in their own home. Current rules that favour so called key workers such as nurses and fire fighters will be scrapped which means any households with an income of less than £80,000, or £90,000 in London, will be able to sign up to the schemes. Also, for the first time, those already in a shared ownership property will be able to move to another, allowing them to use the capital they have gained to move to a bigger property, as their families grow. ‘For years, we’ve had shared ownership, where you part buy, part rent a property. So many people are attracted to this idea, especially those who thought they’d never have a chance of owning a home,’ Cameron said. ‘But, because it’s been heavily restricted, many of those people have missed out. We’ve had local councils dictating who is eligible, based on everything from salary to profession to where the buyer comes from,’ he added. The changes will take effect from April next year and it means some people will be able to buy a house, for example in places like Yorkshire, with a deposit of just £1,400. Mark Hayward, managing director of the National Association of Estate Agents (NAEA) welcomed the news. ‘By relaxing some of the existing restrictions, a potential 175,000 aspiring homeowners will be given the opportunity to own their own home, as well as allowing existing shared ownership homeowners the opportunity to step up the ladder,’ he said. ‘However, as with all housing promises, they can’t come quick, or big enough. There is still a huge issue with supply and available land upon which to build, not to mention the physical bricks, mortar and labour to do so,’ he pointed out. ‘The house building industry is desperately short of human resource and if we are to get Britain building the number of new houses required, we need to address this problem to create actual homes and not aspirational targets,’ he added. Continue reading
Latest index shows slight dip in UK house price growth
House prices in the UK in the last three months were 1.4% higher than the previous three months, the smallest rise since December 2014, according to the latest index figures to be published. Month on month they decreased by 0.2% but are 9% higher in the three months to November than in the same three months than a year ago, taking the average price to £204,552, the data from the Halifax shows. Martin Ellis, Halifax housing economist, pointed out that the annual rate of price growth eased from 9.7% in October but said solid economic growth, rising real earnings and falls in already very low mortgage rates have combined to stimulate housing demand this year. He explained that the increasingly acute imbalance between supply and demand is causing prices to rise at a robust pace and this is a situation that is unlikely to reverse significantly in the short term. Neal Hudson, associate director at Savills research, pointed out that monthly figures can be quite volatile so it is always best to look at the longer term trends. ‘These show continued annual price growth in excess of underlying incomes, driven primarily by increased mortgage lending into the sector but compounded by relatively low levels of stock available,’ he said. ‘Short term indicators have weakened, with house price growth on a three month basis slowing, but we may well see these seasonally adjusted figures revised in coming months,’ he added. He also pointed out that the figures reflect a regular pattern in house price growth emerging over the last couple of years, with strong price growth in the first six months followed by static prices in the final six months on the year. ‘Savills expects this trend to continue next year with a national house price forecast of 5% and so the seasonally adjusted growth currently reported may well be revised upwards in coming months,’ said Hudson. Mark Posniak, managing director of Dragonfly Property Finance, also expects prices to keep rising in 2016 due to the imbalance between supply and demand. ‘The worry is that there is no concerted long term strategy for tackling supply. The lack of properties being put up for sale remains an enigma given that mortgage rates and the cost of living are so low and consumer confidence, overall, is high,’ he said. ‘Talk of imminent interest rate rises has been going on for a year or two now and it may be that people want more clarity on the speed of rate rises before they commit to a purchase. It's hard to believe that 2016 will see any change in the ongoing narrative of low supply, strong demand and rising prices,’ he explained. According to Jonathan Hopper, managing director of the buying agents Garrington Property Finders, while a halving of the pace of quarter on quarter price rises might appear dramatic given the market’s consistent growth this year, it is the first time in… Continue reading
Uncertainty in financial services sector affecting prime London rental values
Rental values in prime central London declined for the second month in a row in November against the background of continued uncertainty in the financial services sector and a seasonal end of year decline in demand. Values fell 0.3%, which meant annual rental value growth dipped to 1.2%, which is the lowest level since August 2014, while rental yields were flat at 2.95%, according to the latest report from real estate firm Knight Frank. It follows a peak of 4.2% in May this year as a degree of demand moved across from the sales market due to uncertainty over taxation and the general election. ‘Since then, nervousness surrounding global economic events including the slowdown in China means that many companies have reigned in relocation budgets and many banks continue to cut headcount as part of restructuring plans,’ said Tom Bill, head of London residential research at Knight Frank. ‘Furthermore, stock levels have risen as more owners adopt a wait and see approach to pricing trends in the sales market, which has tipped the balance in the favour of tenants and put downwards pressure on rents,’ he pointed out. ‘The result is that the number of tenancies started has dropped since 2014, though remains above the level two years ago. Demand, in the shape of new prospective tenants and viewings, is also down compared to what was a relatively strong 2014, though both remain above 2013 levels,’ he added. He also pointed out that demand remains strong in lower price brackets and at the super prime level of above £5,000 per week amid uncertainty around taxation including recent changes for buy to let investors and second home purchases. ‘The result is a three speed market where demand is stronger in higher and lower price brackets than it is in the middle,’ Bill explained. ‘The changes announced by Chancellor George Osborne mean that buy to let investors and those purchasing second homes will be subject to an extra 3% on the rate of stamp duty from April 2016, which could lead to fewer rental properties, which would put upwards pressure on rental values,’ he added. Continue reading
