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UK govt announces details of £7 billion house building priority programme
The UK government has announced a £7 billion programme to make house building a priority which includes more than 400,000 affordable homes. Chancellor George Osborne called it the biggest affordable housing programme since the 1970s when he made the announcement as part of his Autumn financial statement. It will include £2.3 billion paid directly to developers to build 200,000 starter homes aimed at first time buyers. They will be offered at a 20% discount on prices up to £450,000 in London and £250,000 across the rest of the country. He also announced £200 million for 10,000 new homes that tenants can live in for five years at reduced rents while they save for a deposit. They will then have the first right to buy the home. Then there will be £400 million to help build 8,000 specialist homes for older people or those with disabilities, the Chancellor also confirmed. But not all of this is new. The starter homes package has already been flagged up and it is well known that the government wants to build millions of home in the next five years. Nevertheless the programme has been widely welcomed, although concerns have been expressed about the focus on home for sale, although the new homes that tenants can buy after five years will also be welcomed. Among those concerned about the lack of help for the rented sector is Adam Challis, head of residential Research at JLL. ‘The Chancellor's support for 400,000 new affordable homes is welcomed at a time when there is a dire need to expand housing construction right across the country,’ he said. ‘This Government's narrow focus on home ownership is a serious concern however. Support for the private rented sector and social housing is vital to protect the financial stability of millions of households, for whom ownership is beyond reach,’ he pointed out. ‘The private rented sector is the fastest growing tenure in the UK and deserves direct support through the planning system and through the release of public land. Social housing investment provides vital security to more vulnerable households, while also reducing the heavy current reliance on temporary accommodation,’ he explained. ‘Housing delivery desperately needs long term planning rather than short term interventions. They are disruptive to construction programmes and ultimately weaken the system of delivery. Housing should be viewed as infrastructure that protects household stability and supports economic growth,’ he added. Developers will welcome the announcement by the Government of funding for new housing including starter and shared ownership homes, according to Claire Fallows, partner at Charles Russell Speechlys. ‘Questions remain, however, as to whether local authorities will continue to insist on the provision of social and affordable rented units on larger housing sites and, if so, whether Housing Associations will have the funding available to acquire those units. Flexibility by authorities will be required to ensure that housing delivery is not stalled,’ she said. Continue reading
New mortgage market tracker report reveals how many applications are successful
Almost half, 47%, of enquiries to intermediaries about getting a mortgage in the UK resulted in a completion during the third quarter of 2015, according to a new Mortgage Market Tracker report. The quarterly tracker from the Intermediary Mortgage Lenders Association (IMLA) shows how many enquiries result in applications, offers and completions, as well as dropout rates, those attributed to lender declines, and the wider issues of intermediaries’ confidence in the business outlook for the mortgage industry, the intermediary sector and their own firm. The data from this first report also shows that 67% of initial borrower enquiries led to an application, 83% of which then received a lender offer. A similar percentage of offers, 84%, then reached completion. The largest percentage of dropouts occurred during the initial stage, with 33% of borrower enquiries not leading to an application. Intermediaries attributed 27% of all dropouts, equivalent to 14 in every 100 enquiries, to lender declines, with the remaining 73% of dropouts coming from client or broker withdrawals. The largest firms, those with more than 11 employees, and sole traders both outperformed the industry average of 67% converting enquiries into applications, with 70% of consumers progressing through this stage. Once a borrower submitted an application, sole traders achieved the highest rate of offers at 87% compared to an average of 81% and subsequently completions at 88% compared to an average of 84%. However, the smallest firms also reported the highest rate of dropouts due to lender declines at 35%, compared with an industry average of 27% and significantly higher than the decline rates reported by the larger firms. ‘The intermediary channel has never been more important to the UK mortgage market, with consumers and lenders both increasingly relying on brokers to match individual needs to suitable products,’ said Peter Williams, IMLA executive director. ‘Regulatory changes have brought new assessments and criteria to contend with, but this data suggests the majority of applications are getting the green light. It also shows that brokers are playing an invaluable role in the earlier stages by assessing borrowers’ circumstances and providing realistic advice and recommendations,’ he explained. ‘The advantage of a competitive marketplace with a range of mainstream and specialist players is that a decline from one lender does not necessarily mean the end of the road. Rather brokers will work to secure alternative mortgaging opportunities. As this suggests, positive customer outcomes rely on lenders and brokers working together effectively,’ he pointed out. ‘After a period of fundamental change, it is encouraging that intermediaries are upbeat about the business outlook, which bodes well for consumer access to mortgage finance. By tracking the mortgage pipeline, we hope to provide useful data for both lenders and intermediaries to help fine-tune the process and ensure a positive experience for consumers,’ he added. According to Brian Murphy, head of lending at the Mortgage Advice Bureau, brokers… Continue reading
UK lettings agents report fewer rent rises in October
Fewer tenants are experiencing rent increases in the UK with the number of letting agents reporting rent rises falling to a quarter, according to the Association of Residential Letting Agents (ARLA) latest report. This is down from 32% in September meaning that the number of rent hikes in October is the lowest reported this year, the data from the ARLA private rental sector report shows. The data also shows that demand for rental properties dropped in October, alongside supply of available housing, a trend typical of the time of year. ARLA agents registered 33 new tenants on average per branch this month, the lowest amount this year. However, the London rental market bucked this trend. The report found that demand for rental housing in London continued to increase in October with an average of 42 prospective tenants registered per branch, up from 39 in September, an 8% increase. Supply of rental accommodation decreased in line with demand, dropping from 182 properties on average per branch in September, to just 173 in October. However, prospective renters in the East of England and the South West will have better luck finding a property; agents in those regions managed more properties in October than September, with 199 and 184 properties managed respectively. ‘Fewer agents reporting rent increases should bring some relief to tenants before Christmas. It’s definitely a step in the right direction, however a quarter of tenants are unfortunately still seeing hikes,’ said David Cox, ARLA managing director. ‘Although it’s typical that demand dropped at this time of year, as there’s a seasonal lull in the run up to Christmas, we except to pick up again in January,’ he added. Looking ahead to next year, ARLA hopes to see the number of tenants experiencing rent hikes remain low with supply and demand levelling out. ‘However, a lot is resting on the economic and political agenda. We’re still waiting for new houses, promised by the Prime Minister to be built,’ said Cox. ‘Whilst this will take pressure off the rental prices as supply rises, the changes to landlord tax proposed under the Finance Bill is likely to discourage new landlords from entering the market,’ he pointed out. ‘Further, it’s been a waiting game all year to see if Bank of England governor Mark Carney will raise interest rates in the New Year and this will play a big part in determining whether renters looking to buy a home will be able to afford to,’ he explained. ‘And when interest rates do rise, the goal of home ownership will be pushed further out of reach for many and of course put further pressure on the private rental sector,’ he added. Continue reading
