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Second steppers finding it hard financially to move up housing ladder
Second Steppers in the UK need to find an extra £58,400 to fund the move to their second home, over double the average first time buyer deposit, according to new research. This gap is around £15,000 bigger than in 2013 and £18,000 bigger than in 2012, the fourth annual second steppers report from Lloyds Banks shows. Almost half, 46%, say the costs and fees associated with moving house is the biggest barrier to moving up the ladder. However, 40% of second steppers think it will be easier to sell this year, almost double the figure of 2013 and treble that of 2012. The report points out that growing house prices mean there is an ever widening gap for those making the move to the second step on the housing ladder. Yet despite this, many have increased confidence in the housing market and as a result, more confidence in being able to make the jump to the next step. Second steppers are the link between first time buyers and the rest of the housing ladder. They are living in the homes that the first time buyers need to buy to keep the market moving. Without movement from second steppers, movement on the ladder comes to a standstill on the second rung. Despite increasing house prices boosting equity levels for second steppers, the findings show people living in their first home have to find an extra £58,400 to plug the gap between the sale price of their current property and the cost of the house they would ideally move to. This figure is over double the amount of the average first time buyer deposit of £25,848, meaning it is far more expensive to move up the ladder than to get on it in the first place. Year on year, this figure has significantly increased. Nationally, the figure of £58,400 has risen by £14,900 since 2013 and £17,900 in 2012, when the figure was £40,500. However, across the country, there are significant regional variations in the perceived size of this gap. In the West Midlands, people will need to find just £21,000 extra to make the step to their desired second home. At the other end of the scale, people in East Anglia say they need £80,800 to make the jump. The report also points out that despite the growing financial gap between first and second properties, confidence in the market is improving. Just a quarter of second steppers see economic uncertainty as a key challenge, reducing by 10% in a year. Unsurprisingly, the number seeing negative equity as a challenge also reduced by 11 percentage points to just 14% of respondents. The Help to Buy Mortgage Guarantee scheme has had an impact on the mortgage market, with Treasury data showing that 79% of purchases with a mortgage guarantee were completed by first time buyers. This has contributed to second steppers being more confident that there is the demand coming through allowing them to sell. Just 29% see a lack of first time… Continue reading
Half of over 40s think they will still have a mortgage or rent during retirement
Half of people aged over 40 believe they will still be repaying their mortgage or paying rent when they retire, new research has found. The figures from a study by specialist insurer Partnership shows that while people aspire to owning their own home, a significant amount will still be making mortgage repayments when they retire. Some 31% think they will still have a mortgage and 20% will be paying rent when they retire. In addition, with 35% of households in England living in social or private rental accommodation, a number of retirees will need to meet these costs in later life. As people age and either purchase property or repay their mortgage this changes the number who expect to be meeting these costs in retirement but 18% of 66 to 70 year olds still expect to need to make rental payments and 15% expect to be repaying their mortgage. A breakdown of the figures show that of those aged 40 to 50 42% expect to still be paying rent and 26% a mortgage. In the 51 to 55 age group 37% expect to be paying rent and 18% a mortgage while in the 56 to 60 aged group some 22% expect to pay rent and 15% a mortgage. In the 61 to 65 age group 21% say they are still paying rent and 16% a mortgage while in the 66 to 70 age group it is 18% and 15% respectively. In addition to meeting housing costs, these retirees are also likely to be put under financial pressure as they look to meet costs such as council tax, utilities and upkeep of their property. ‘Most people aim to own their own home by the time they retire but the trend towards remortgaging, purchasing later in life and being kept off the housing ladder by high house prices means that this is out of reach for almost a third of people,’ said Mark Stopard, head of product development at Partnership. ‘This may see some people taking advantage of the opportunity to work longer but for some people, especially those with health issues, this is simply not an option. While those in private or social rental accommodation need to focus on securing sufficient income to meet these costs, those who are still repaying their mortgage have more options,’ he explained. ‘Either they can use part or all of their pension to repay the borrowing, although this is likely to significantly impact on their later life income, or they can use equity release which can mean they will leave less to their families but face less financial pressure,’ he added. ‘When people consider their retirement, it is vital that they look to reduce their mortgage borrowing as much as possible. No one wants to worry about cutting back on essentials such as food and heating to meet housing costs when they should be enjoying retirement,’ he concluded. Continue reading
Review of UK housing and planning policies widely welcomed
Changes need to be made to housing and planning policies in the UK to ensure enough new homes are being built, according to a property market review. The Lyons Housing Review, commissioned by the Labour party, identifies the changes which need to be made to increase the number of new homes to 200,000 a year. It says there must be new powers for local communities to build homes in places people want to live, that councils must produce a home building plan and allocate sufficient land for development and first time buyers should get priority access to new homes. The review says local communities should have the power to build the homes in places people want to live. Councils will be able to designate ‘housing growth areas’ and will have powers to assemble land and give certainty that building will take place. They will also ensure on larger developments the planning gain that results will in part be used to invest in the schools, roads, green spaces and GP surgeries that make developments possible. It also says councils should be compelled to produce a home building plan and allocate sufficient land for development. Labour says if it wins the general election next year it will make it mandatory for local authorities to produce a local plan to meet the housing needs of the community. If they do not allocate sufficient land or present a plan, the planning inspectorate will have powers to step-in to ensure the housing need is not ignored. The third main recommendation is that first time buyers from an area should get priority access to new homes. Councils would be given the power to reserve a proportion of homes built in ‘housing growth areas’ for first time buyers from the area for a period of two months. In addition, local authorities will be able to restrict the sale of homes in these areas so they cannot be sold for buy to let or buy to leave empty properties. The changes identified have been widely welcomed. According to Susan Emmett, residential research director of Savills the recommendations should help boost housing numbers regardless of who is in government next year. ‘The report clearly recognises the need for a long term, more strategic approach to planning for homes, integrating housing with infrastructure and increasing the number of players operating in the market,’ she said. ‘While we expect that large house builders will continue to provide the bulk of new homes, Lyons’ recommendations for supporting smaller builders and helping Local Authorities to build more is crucial if we are to increase overall housing numbers,’ she explained. ‘We also welcome the report’s recognition that we need to be delivering homes across all tenures including homes for rent. We expect to see the number of people renting continue to grow and supporting institutional investors to build to rent is essential to provide the good quality homes needed,’ she added. The British… Continue reading
