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Surge in house equity release in UK as over 55s cash in on property wealth
Equity release lending to UK home owners over the age of 55 totalled £384.3 million in the second quarter of 2015, the largest amount for any quarter since records began. The latest data from the Equity Release Council show that this surpasses the previous high of £375.4 million reached in the third quarter of 2014 and that the over 55s withdrew £4.2 million of housing wealth every day from April to June. This uplift comes despite savers gaining greater access to their pension pots under the freedoms launched on 06 April. With house prices rising again, it shows the growing appeal of using property wealth as an extra source of retirement income in later life, according to the report. Also, record lending in the second quarter meant the total value of equity released in the first six months of 2015 hit £710 million, the largest sum on record for the first half of the year and an 11% increase on the first half of 2014. There were 5,414 new equity release customers in the second quarter of 2015, an 11% increase on the last quarter, pushing the total number of new customers past 10,000 for the first six months of 2015. The value of lending, via lump sum lifetime mortgages, increased by 10% year on year in the first half of 2015 to reach £285.3 million, the highest total for lump sum activity in the first half of any year since the first half of 2007 when the value hit £355.9 million. However, the value of lending via drawdown lifetime mortgages surpassed this rate of growth, rising 12% year on year from £379.2 million in the first half of 2014) to £423.5 million in the first half of 2015. The data shows it also rose faster from the first to second quarter, at 21% compared with 14% for lump sum products. The Council says this was as customers took advantage of the flexibility to withdraw their housing wealth in regular instalments rather than as a one off amount. Home reversion plans account for less than 1% of the overall equity release market, yet these too saw an increase of 18% in lending from £534,765 in the first quarter of 2015 to £632,647 in the second quarter. ‘The last three months have been a landmark period for UK retirees and those approaching retirement, and equity release activity continues to grow amid a sea of change. There is no doubt the pension freedoms have created more options for people to consider, but the appeal of tapping into housing wealth is on the rise as older consumers seek to make use of all the assets at their disposal,’ said Nigel Waterson, chairman of the Equity Release Council. ‘Doom and gloom often surrounds discussions on retirement income, but while contributions to pension pots remain low, an entire generation of home owners have been paying into property their whole lives… Continue reading
Revamped parliamentary group to make recommendations on UK housing
The Royal Institution of Chartered Surveyors (RICS) is to take a lead role in supporting a new All-Party Parliamentary Group (APPG) for Housing and Planning to address the national housing emergency in the UK. The APPG for Housing and Planning, previously chaired by MP Tim Yeo, will now be chaired by James Cartlidge, Conservative MP for South Suffolk, and tasked with recommending wide ranging, innovative solutions to reshape the housing market. It will also look at ways of increasing the housing stock for both rental and private ownership, and speeding up building of sustainable housing in the UK, which now faces an annual shortfall of 130,000 homes. The APPG will consist of MPs from a range of urban and rural constituencies. RICS, which comprises over 90,000 professionals in the UK working across the construction, land and property markets, will support the group as Secretariat. ‘Housing is increasingly becoming one of the most critical policy challenges facing local and national government, and with a Housing Bill pending, it is likely to become more political and controversial,’ said Cartlidge. ‘In this context, a cross party Parliamentary group focused objectively on the national policy challenge of housing offers a vehicle for taking the debate forward in a way that is both positive and constructive,’ he explained. ‘Having spent my working life in the shared ownership housing sector, I am acutely aware of the challenges facing first time buyers, particularly in London. Equally, as a rural MP, I recognise the need for development to be sustainable. Ultimately, there are a whole raft of complex issues in housing and planning today but I hope that our APPG can make a real contribution to the debate,’ he added. RICS chief executive Sean Tompkins pointed out that in the region of 245,000 homes need to be built every year to address the UK's housing crisis. ‘The solutions we need must be innovative and wide ranging, but also grounded within a political framework which allows them to be implemented,’ he said. ‘A coherent housing strategy is also central to many other key issues for the country. For example, a decent roof over your head can enhance your health, academic achievement, job success and social inclusion,’ he added. He also pointed out that the organisation’s Royal Charter and public interest mandate makes it well placed to provide the framework for the constructive debates and broad conversations that must happen across the political spheres in order to develop the solutions. ‘Our expertise, research and market data will all be made available to the Group. The RICS believes there are solutions to be found and we look forward to assisting this new APPG with its valuable agenda,’ Tompkins concluded. Originally formed under the last Parliament, the APPG for Housing and Planning will look to deliver its first set of recommendations later this year. Continue reading
French Riviera poised to benefit from demand from global wealthy buyers
Prime property prices in the world’s most expensive cities are cooling which means that wealthy property investors could look increasingly to other cities and leisure hotspots such as the French Riviera, new research suggests. While in France as a whole property prices and sales in the last three years have fallen the Riviera is still a magnet for wealthy buyers. Indeed, the area that stretches from St Tropez in the south west to the border of Italy is the third richest region in France. While prices in France overall were down 8.1% as of December 2014 compared their peak in the third quarter of 2011, the Provence-Alpes-Côte d'Azur (PACA) region consistently commands the country’s highest house prices and the second highest apartment prices behind the Paris region. The latest French Riviera residential market report from international real estate firm Savills also points out that it is an important global tourist market where some 17% of properties are second homes or occasional accommodation, compared to 11% nationally. The analysis points out that like the rest of France, prices have fallen in PACA and the market is a buyers’ one. Values in the region have tracked the national average closely, and are down 9.5% from a 2011 high. ‘The market did not see the same rally between 2009 and 2011 as that experienced in Paris, so values currently look better value than those in the French capital,’ the report says, adding that government rhetoric and negative media coverage around the taxation of wealth, coupled with a faltering domestic economy has slowed activity across the Riviera's prime markets. The number of €3 million plus deals fell by 44% across the region between 2007 and 2013. Cap Ferrat and St Tropez, home to the Riviera’s largest prime markets, saw the sharpest declines, down 69% and 54% respectively. ‘Although transaction numbers are down, purchasers of the region’s best properties tend to hold for long periods, with low gearing as these homes are viewed as a store of wealth, so forced sales are rare and, as a consequence, there is no mechanism for prices to fall substantially,’ the report explains. It also points out that property in the French Riviera for most is viewed as an asset with long term appeal and therefore a safe store of wealth and regional statistics disguise local market characteristics. ‘What sets the French Riviera apart is extremely limited supply in the most desirable spots. In Saint-Jean-Cap-Ferrat, a peninsula of land east of Nice, there are around 500 properties and only a handful come onto the market in any single year. Supply is kept low and prices high by wealthy buyers who hold for long periods and are not generally forced to sell,’ the report says. ‘Cap-d’Ail, Beausoleil, Roquebrune-Cap-Martin adjoin Monaco and have benefited from the surge in activity that the Principality’s residential markets have experienced. Significantly cheaper prime property is available here, albeit without the tax benefits. The area has proved popular with… Continue reading
