Uk
New home building in UK needs to address the needs of older people too, says report
New home building in the UK to cope with the country’s chronic shortage of housing should not concentrate just on the needs of first time buyers and younger people, according to a new report A new report from the International Longevity Centre UK (ILC-UK) whilst the Government’s focus on first time buyers is understandable faster progress in helping these younger generations get on the housing ladder would be made if more energy was put into meeting the housing needs and aspirations of their parents and grandparents. The report calls for more housing to be built by local authorities, a wider range of commissioners of new house building, better rental offers for older people with secure tenancies, more shared ownership options for older people and overall greater choice for older people in general needs housing. The authors argue that the lack of new housing supply has contributed to the rampant increase in house prices in recent decades and this in turn has resulted in housing wealth becoming the principal driver of inequality in the UK. It suggests that providing a better choice of options for older people looking to downsize would unlock substantial equity that could be made available to invest in new homes whilst releasing existing family homes into the market. ‘Finding ways in which local authorities can promote, support, finance and commission new homes will be critical to achieve the Government’s house building targets and in ensuring greater commissioning of homes suitable for older people,’ said Sir Michael Lyons, co-author of the report. ‘We need a better rental offer with secure tenancies and confidence of rent stability to encourage older home owners looking to release capital to provide an income in later years and to help fund housing for their children and grandchildren,’ he explained. ‘The increased opportunities for self-build, of self commissioning that government is promoting could be an attractive option for those who have equity but feel there is a lack of choice to meet their aspirations or those for whom retirement settings do not appeal,’ he added. According to Ben Franklin, head of economics of ageing at ILC-UK, supporting the country’s current and future housing needs must be a key pillar of a new social contract between the state and the individual. ‘For more than a decade we have simply not been building sufficient homes to meet demand. This is having a detrimental impact on the livelihoods and wellbeing of people across all ages,’ he said. ‘Unfortunately this is not going to change any time soon unless we make some radical changes to the system. The UK’s population is growing and is ageing which will only exacerbate the current crisis. In this context, supporting the housing needs of older people can be one important component of a strategy to revitalise the nation’s housing,’ he added. Continue reading
Foreign buyers face new 15% extra property tax in certain parts of Vancouver
A new tax for foreign property buyers is being introduced in British Columbia in Canada in an attempt to cool escalating house prices. The 15% foreign buyer tax will come into effect on 02 August 2016 at a time when prices in the province’s capital city Vancouver are escalating. Indeed, the latest global cities index from international real estate firm Knight Frank shows that prices in the city have increased by 17.3% in the mainstream market and by 26.3% in the prime market in the year to March 2016. Policymakers have been looking at ways to cool price inflation in recent months and the new tax will relate to residential purchases in Metro Vancouver, an area that extends from Bowen Island to Maple Ridge/Langley Township. According to Knight Frank, in real terms the new tax will result in an extra $300,000 in property transfer tax based on a property bought for $2 million by a foreign citizen. This figure will rise to $1.5 million for a $10 million home. The latest government data shows foreign buyers, mainly from China, purchased more than $1 billion worth of property in British Colombia between 10 June 2016 and 14 July 2016 of which around 86% was located in the Lower Mainland. The foreign buyer tax will also apply to corporations that purchase residential real estate and the British Columbia Government has the power to examine the citizenship status of directors and the beneficiaries of corporate profits in deciding whether to add taxes. According to the Finance Minister, the resulting revenue from the new tax will be spent on housing affordability projects. However, Knight Frank points out that some loopholes exist and details as to how it will be policed remain unclear. For example, the tax itself relies on buyers self reporting their nationality and providing a social insurance number, backed up by new auditing procedures and penalties. However, as yet it is unclear whether a resident with citizenship could buy a property by proxy for a family member living abroad. ‘There is no doubt that the new law will cool sales volumes and prices as foreign buyers absorb the additional cost implications. It is worth noting that the planned legislation also allows the BC cabinet to alter the foreign tax rate by between 10% and 20% at a later date and expand it to outside the Lower Mainland,’ the firm explains. ‘The legislature was originally recalled to discuss the merits of a tax on vacant homes, whilst the legislation provides an enabling power for such a measure, it is unclear at this stage whether the Government will go ahead with such a move,’ it adds. Vancouver isn’t the only city where policy makers are trying to stem the flow of speculative capital into their local housing market. Hong Kong, Singapore, Australia, Switzerland and Mexico have all taken steps either by imposing additional taxes or stamp duties, introducing a one off fee or restricting where or what type of property… Continue reading
Steady rise of equity release in UK housing market continues
Some £8.2 million of housing wealth was withdrawn in the UK every working day in the second quarter of 2016 as equity release lending passed £0.5 billion for the first quarter on record. Overall there was £514.4 million of lending in quarter two, up 34% year on year and 58% higher than in the second quarter of 2014, according to the latest figures from the Equity Release Council. The council report points out that the three busiest quarters for equity release lending have all come within the last 12 months and the annual rise in the number of new plans agreed is the fastest seen in 13 years. Common uses for equity release include paying off existing mortgages and loans, providing extra retirement income, funding home improvements or care related adaptations, paying for travel or other one off expenses, and gifting money to family members as a ‘living inheritance’. The council also says that over 55s increased appetite to use housing wealthy has been supported by market developments which include new providers and increasing choice of products and features emerging. In addition, the market received support from the regulator in April when they amended the legislation to allow optional interest repayments to be exempt from mortgage affordability rules. Year on year, the council’s figures show the biggest percentage growth in the value of lending in the second quarter of the year was for lump sum lifetime mortgages, typically involving a larger release of housing wealth in a single payment, up 37% or £56.8 million compared to the second quarter of 2015. However, lending via drawdown lifetime mortgages, allowing consumers to make multiple withdrawals of equity as and when needed, continued to account for the larger share of the market, growing 31% or £72.4 million to £304 million compared to the second quarter of 2015. Home reversion plans also experienced a rise in the second quarter of 2016 with the total value of activity more than doubling year on year from £623,647 in the second quarter of 2015 to £1.5 million. Looking at new customers’ product choices, some 67% opted for drawdown products in the second quarter, up from 65% a year earlier, while the share of lump sum products dipped slightly from 35% to 33%. With market activity having grown significantly during that time, the number of new drawdown plans agreed was up 27% year on year compared with 16% for lump sum plans. Overall, it meant the total volume of new plans agreed across the whole market was up 23% year on year, the highest annual growth rate in nearly 13 years since the third quarter of 2003. The 6,671 new plans agreed was the largest quarterly total since the fourth quarter of 2008. ‘These figures are the latest sign that UK home owners increasingly see housing wealth as a fundamental part of their retirement funding plans. The long term rise of house prices… Continue reading
