Uk
Investigation reveals alarming flood risk for new homes in UK
Floods have already hit thousands of homes in the UK this winter and now an investigation has found that many more homes being built under the government’s new home building drive are also at risk. Nearly half the areas earmarked for fast tracked housing development by a flagship government scheme are at significant risk of flooding, making thousands of new homes potentially uninsurable, according to a Greenpeace investigation. The sites targeted by a recent house building drive unveiled by Chancellor George Osborne include two areas threatened by the latest floods and others which were inundated during previous emergencies, the Greenpeace report says. It claims that the findings raise more questions about the government’s approach to flood risk management amidst growing controversy over delays in the construction of flood defences for existing homes in areas hit by flooding in Cumbria and Lancashire in recent days. Earlier this year, the Chancellor announced a flagship housing scheme which saw 20 brownfield sites around the country designated as new housing zones, with local councils given access to money and experts to expedite the building process. Greenpeace UK researchers used details obtained through Freedom of Information requests to plot the location of these housing zones, and cross referenced this with flood risk maps from the Environment Agency. They found around nine of the 20 zones, comprising a total of 9,000 planned new homes, are in areas now identified as being partially or fully at risk from flooding. Under the terms of a new government flood insurance scheme soon to be implemented, these properties would be excluded from cover. The report claims that this would leave home owners reliant on commercial insurers who may choose not to insure homes built in flood zones, or do so at prohibitively expensive rates. A spokesperson for Flood Re confirmed to Greenpeace that ‘properties built from 2009 onwards’ in flood risk areas are still excluded from the government scheme. ‘It would be irresponsible to incentivise developers to build in such areas simply because those properties could have their insured flood risk ceded to Flood Re,’ the spokesperson added. Greenpeace UK also obtained new figures showing that the number of people employed by the Environment Agency to work on Flood and Coastal Erosion Risk Management fell by 230, a 5% cut, in the last three years. The agency plays a key role advising councils on flood risk. ‘The current flood emergency isn’t even over yet, and the government is already storing up the next one. Rushing to build thousands of new homes in flood risk areas whilst at the same time cutting flood protection staff is a recipe for disaster,’ said Greenpeace UK chief scientist Dr Doug Parr. ‘When it comes to energy, flood defences, and other big infrastructure projects, we need the government's hands to start following what the government's mouth is saying rather than acting of their own accord,’ he added. The details in the report indicate that in Yorkshire there are flood warnings… Continue reading
UK buyer deposit now at lowest level for six years
Raising a deposit, which has been the single biggest barrier to home ownership in the UK since 2010, is now at its lowest level for six years, new research shows. However, it still presents a barrier to over half of consumers with 52% saying it is a hurdle to overcome, according to the latest Property Tracker report from the Building Societies Association (BSA). But it points out that this figure is down from 59% in September 2015 and lower than the high of 69% recorded in September 2011. From September to December 2015, access to mortgage finance as a barrier to home ownership dropped from 41% to 38%. The affordability of monthly mortgage repayments fell from 35% to 33% and lack of job security is now at 26%, down from 28%. The BSA says that results indicate that people are feeling reasonably confident about home ownership as an option for them. This could partially be as a result of the focus on housing in the Autumn Statement in November and is evidenced by the strong lending by building societies and other lenders across the market this year. ‘This snapshot of sentiment in the housing market shows that consumers are feeling reasonably optimistic about getting on or moving up the property ladder,’ said Paul Broadhead, BSA head of Mortgage Policy. ‘Awareness of Government schemes, such as Help to Buy and the new Help to Buy, London plus the availability of higher loan to value mortgages helps to bring choice and competition to the market. Housing generally needs to remain a top priority for the Government,’ he pointed out. ‘Now is the time to focus on building more homes, supported by appropriate investment in infrastructure, in order to begin to address the long term imbalance of housing supply with demand,’ he explained. ‘Innovative mortgage products and intermediate forms of tenure must also be championed, not just by building societies, but by all lenders, the regulators and government. This will go some way to delivering a sustainable housing market which caters to the needs of a wide range of credit worthy consumers, not just those with ‘vanilla’ borrowing requirements,’ he added. Continue reading
Stamp duty increase for UK landlords equivalent to 11 months net income
The cost of the new 3% stamp duty rate for UK landlords announced recently in the Autumn Statement would be the equivalent to 11 months income for the average mortgaged landlord, new research has found. It is suggested that most private sector landlords buying after April 2016, when the measure is introduced, will likely try to offset the cost by offering less when purchasing. It comes at a time when the rent on newly let properties has increased by 2% year on year, led by markets in the East of England, according to research by property services group Countrywide. In the Autumn Statement, the Chancellor George Osborne announced an additional 3% stamp duty rate for landlords and second home owners. The research also suggests that the rate will put pressure on yields for landlords, unless they account for increased costs when buying. Indeed, the research shows that if the higher tax burden is not factored into the purchase price of a property, it would mean a reduction in gross yield of 0.2%. That is equivalent to 11 months income for the average landlord, taking into account borrowing costs, based on the average loan to value of 68%. Landlords in the South West and North East of England will see the highest cost relative to rental income, as the extra tax burden is equivalent to 14 months and 12 months of income, respectively. Those buying in the North West of England will see the least, with the extra stamp duty equivalent to eight months of income. The majority of landlord purchases take place in London, the South and East of England and some 60% of homes sold to landlords in England this year were in these regions. Landlords in these areas will see the biggest cash increase in stamp duty, £6,000 on average. However, high expectations of future house price growth will likely mitigate some of the impact of the tax increase. If prices grew at the same rate as the last five years, within 12 months the growth in house prices would have offset the cost of the additional stamp duty. In the Midlands and North of England, 16% and 12% of total sales respectively are to landlords. Countrywide data shows that the average property bought by landlords in these regions would previously not have faced any stamp duty but will now face a £3,200 tax bill next year. The changes to stamp duty come as the shortage of homes available to rent continues, levels of stock have decreased 5% year on year. The growing imbalance between supply and demand will continue to support rent increases in future months as tenants compete for fewer homes. ‘The stamp duty increase will impact landlords’ purchasing power. Many entering the market will be faced with a choice between making a lower offer when buying or having to cover the additional costs themselves,… Continue reading
