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UK group suggests special help for oldies to downsize and free up family homes
A group of politians in the UK have called for older home owners to be given support to help them move home so that more properties can be made available for families. According to the All Parliamentary Group on Housing and Care for Older People a Help to Buy style equity loan scheme and stamp duty exemption would encourage older people to downsize. The claim follows an analysis revealing a third of over 60’s would downsize if it was easier, but up to half of older home owners are priced out of local retirement housing. Their report argues that a Help to Move equity loan would help older homeowners with lower value properties ‘bridge the gap’ between the value of their home and the purchase price of a new retirement property. It also said that many older people cannot easily access mainstream mortgage lending, even when they can afford the repayments. The report goes on to argue that exempting older people purchasing homes worth up to £250,000 from stamp duty would reduce their transaction costs, while leading to a net gain for the Treasury because of the consequent moves in the property market. It also points out that the ‘guidance guarantee’, to be brought in with new pensions freedoms next year, as well as a new duty on local authorities to provide care advice, should be wrapped into a comprehensive package together with housing advice, helping older people make decisions about where and how they live after retirement. The report cites analysis by the think-tank Demos revealing 58% of over 60s, equal to around eight million people currently living in seven million homes, are interested in moving. A third of over 60s specifically wanted to downsize, while a quarter said they were interested in buying a retirement property. If ‘Help to Move’ encouraged all those wanting to downsize to move home researchers calculate that 4.3 million family homes would be freed up, easing the pressure on the housing market. However, between 40 to 50% of older home owners aren’t able to afford to downsize in their local area as their family home is not worth as much as new retirement housing, making additional financial support crucial for many older people in lower value properties. The group points to land prices, an overall lack of supply, and limited availability of ‘shared ownership’ options as reasons why retirement housing is unaffordable for many older people. ‘More and more people in their extended middle age are thinking about downsizing. This can mean much reduced fuel bills and maintenance costs, perhaps the release of some capital, and can prevent a forced move in later life. But down-sizing is not easy,’ the group’s chair Lord Best. ‘Our report recommends a Help to Move package of Stamp Duty relief, financial advice and mortgage support like the Help to Buy assistance for younger purchasers to generate the demand that will get more high-quality homes built for this age group,’ he added. Claudia Wood, chief executive of the… Continue reading
Annual residential rents up 1.3% in Australia, but cities show differing rates
Annual rental rate for houses and apartments in Australia increased by 1.3% in the third quarter of 2014, according to the latest data to be published. In the capital cities, house rents remained flat at 0% growth while rental rates for units increased by 2.4%, the RP Data quarterly rental review also shows. According to RP Data national research director Tim Lawless, investors entering the rental market need to be aware that rents aren't rising anywhere near the pace of capital gains which is pushing rental yields lower, particularly in Sydney and Melbourne where values have increased the most at a time when rents aren't doing comparatively much at all. For houses, Darwin currently holds the highest weekly median rental rate at $660 followed by Sydney $525, Canberra $480, Perth $462, Brisbane $400, Adelaide $350, Melbourne $390 and Hobart at $330. For units, Darwin once again emerged as the most expensive market on the rental rate front by recording the highest weekly median rental rate for the quarter at $550 followed by Sydney $500, Perth $450, Brisbane $390, Canberra $383, Melbourne $370, Adelaide $300 and Hobart $275. Lawless noted that while detached house rents remained unchanged across the combined capital cities over the quarter, this cannot be said for each individual city. Brisbane is only city where rents remained unchanged. A breakdown of the data shows that Melbourne saw 2.6% rise, Darwin and Hobart both saw growth of 1.5%, Adelaide was up 1.4% and Sydney by 1%. Perth saw rents fall by 2.7% and Canberra a fall of 2%. RP Data analysts reported that over the third quarter of 2014 capital city rental rates for both houses and units remained unchanged. Across the combined capital cities, rental rates for houses were recorded at $430 per week, while median weekly rental rates remained at $420 for units. On a national level house rents also remained steady over the three months to September at $400 per week, while for units, rents fell by 1.3%, down $5 over the quarter to $390 per week. Across the unit market, none of the capital cities recorded a rise in rents over the September quarter and the majority of cities saw rents remain steady over the three months. Canberra rents fell by 3.2% to $383 per week and Hobart rents fell by 1.8% to $275. ‘The performance of rental markets are diverse, however the common theme is that generally the rate of capital gain is outpacing the change in weekly rents which is driving rental yields lower,’ said Lawless. ‘This is happening at a time when investment demand is at record levels and trending higher, which highlights that most investors are focussing on capital gains and ignoring the low yield scenario. The softer rental conditions are likely the result of the surge in investor related activity which is seeing more rental supply hit the market,’ he added. Continue reading
October saw a further dip in property valuations in the UK, latest research shows
The UK housing market has now cooled following a pick-up in valuations activity in September with October seeing the total number of valuations fall by 20%, new data shows. However, on an annual basis, housing market activity decreased by 10%, an improvement from a slightly steeper fall of 12% over the 12 months to September 2014, according to the latest report from Connells Survey & Valuation. ‘While the housing market is now less animated than in September, the slowdown is broadly in line with seasonal expectations and is not an alarm bell. On average, we have seen a 16% drop from September to October every year since 2010,’ said the firm’s Corporate Services Director. But he pointed out that beyond seasonal factors, there are other things contributing to this slowdown. ‘The introduction of stricter policies designed to restrain uncontrolled growth and protect against a return to the property bubble of 2008 have tempered the housing market. For instance the recent loan to income cap which came into force in October seems to have had a considerable impact,’ he explained. ‘We may see a further seasonal lull in the housing market as we approach the holiday season. And looking further ahead, the General Election in May 2015 is also likely to bring increased caution with the prospect of policy uncertainty,’ he added. The research report also shows that buy to let performed the strongest with a noticeably small annual dip of 7% compared to the rest of the market. Even on a month on month basis this section of the housing market did better than the others with the smallest drop of 17% since September. ‘Buy to let was the strongest performing sector in a clear indication that lenders are focusing on low risk investors as a result of increased regulation. Policies like loan to income caps have introduced stricter lending rules but crucially do not apply to the buy to let sector. There are now an array of competitive rates out there, especially on low LTVs,’ said Bagshaw. First time buyer valuations made up almost a third of total activity in October but the number of valuations for first time buyers was still down 18% compared to the previous month, and 11% lower on an annual basis. Other owner occupiers moving home saw a month on month dip of 21%, as well as the biggest annual drop of 16% compared to October 2013. ‘While Help to Buy has supported many first time buyers to get on the property ladder, other new policies have introduced fresh limits to promote responsible lending. These new caps seem to have affected first time buyers and home movers the most,’ Bagshaw said. ‘The impact of Stamp Duty on buyers is also not to be ignored. Though it has been a permanent feature of the housing market for a while, the prospect of a hefty tax bill… Continue reading
