Uk
Research suggests potential buyers are not savvy about UK mortgage rules
Two thirds of potential house buyers in the UK do not understand the new mortgage rules which were introduced last year, new research has found. Some 31% of people who plan to buy a property within the next two years are unaware that mortgage rules were overhauled more than a year ago and a further 35% did know that the regulations had changed, the study by lender and broker Ocean Finance shows. In April 2014, the biggest piece of mortgage regulation in a decade came into force. The changes, brought in by the Financial Conduct Authority, mean lenders must take additional steps to ensure borrowers only get a mortgage they can afford. In practice, the new mortgage rules mean that borrowers face increased scrutiny from lenders about their incomes and their expenditure including spending on things such as childcare, holidays and entertainment. Yet 70% of those questioned were unaware that lenders are required to look closely at their spending. Consequently, a quarter said they haven’t changed their spending habits to help them qualify for a mortgage. Of those who do know that lenders are now required to examine spending, more than a fifth have reduced their spending on treats and have stopped contributing to life assurance and pensions to keep a greater proportion of their income in their bank accounts. The research also found that just 24% of aspiring home buyers questioned were aware that the new rules also test their ability to afford a mortgage if interest rates rise. And even fewer, 16%, knew that the rules would also test their ability to withstand changes to their personal circumstances. To help demystify the new rules and ensure they are prepared to apply for a mortgage, almost a fifth of potential buyers have sought advice from an independent mortgage broker and 30% have looked online for information about the rules. But 14% have relied on their friends or family for advice and a third have not sought any advice on applying for a mortgage. The research shows that a third of potential home buyers are so concerned about the tougher mortgage rules that they expect to have to delay buying a house so they can save for a bigger deposit and get into a stronger position to obtain a mortgage. 'More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality. Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,' said Gareth Shilton, Ocean’s spokesperson. 'As an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next year, it's key that their finances are in order, including checking their credit file… Continue reading
International students add £600 million to London’s private rented sector
The 107,000 international students studying in London contribute some £600 million in rental income to the capital’s rental market, new research has found. The wealthiest Chinese, Russian and Malaysian students typically spend up to £1,500 per week to live in plush addresses in Mayfair, Knightsbridge and South Kensington, says the report from private rental market lettings firm E J Harris. Using data from their own client instructions over the last three years and drawing on figures from the Government’s Higher Education Statistics Agency (HESA), the firm analysed the number and country of origin of foreign students in the capital, where they choose to live, the type of properties they let and how much they spend in the private rental sector. There are some 107,000 international students studying in London, 40,000 from continental Europe and 67,000 from the rest of the world. Overall they spend £1.32 billion on tuition fees, some £1.36 billion on accommodation and subsistence of which £600 million goes on private lets or halls of residence costs and £121 million through friends and family visiting them in London whilst they study. By country of origin, the largest group of international students studying and living in London come from China who make up 18% of all foreign students in the capital, followed by students from the USA at 9%, India 7%, Hong Kong 5%, Malaysia 4% and Nigeria 4%. Other significant foreign student nationalities are people from Saudi Arabia, Singapore, Pakistan and Canada. On an annual basis some 20% of the firm's clients in inner London are students. Of these 50% are foreign students, the balance are British students. They are normally 18 to 22 years of age from affluent families. The report suggest that the accommodation for these students is predominantly provided by the bank of mum and dad although some receive special grants from their respective countries. The wealthiest overseas students tend to prefer living in Mayfair, Knightsbridge, Marylebone and South Kensington, whilst others and British students tend to live in Notting Hill, Bayswater, Shepherds Bush and Kingston Upon Thames. The most affluent international student clients are from China, Thailand, Russia, Malaysia and Nigeria. The top spenders can afford to pay £1,500 per week for an apartment in Knightsbridge or Mayfair. For example, on Old Brompton Road, just by the underground station, there is an apartment building extremely popular with affluent overseas students. However, the majority of overseas students typically pay £500 to £600 per week for a two bedroom apartment in Notting Hill, South Kensington, Shepherds Bush or Bayswater. In Shepherds Bush the Sinclair Mansions apartment building is very popular with students and whenever a flat becomes available there are up to 500 enquiries from students from around the world wanting to secure the let. 'There are over 100,000 international students studying and living in London and their numbers are rising. University applications from overseas students are… Continue reading
West London prime property market out performs rest of sector in London
Residential property growth in the prime west London market is outperforming the rest of the sector in the city, new research shows. The area starting in Hammersmith and heading west to Ealing saw average property values grow by 4.1% in the second quarter of 2015, leaving annual growth at 0.5% compared to the small falls seen in other prime London markets. The value of properties priced over £2 million, the majority of which are concentrated in Hammersmith and Chiswick, fell 2.2% over the past year, the data from real estate firm Savills also shows. At the top end of the market, buyer caution has been evident, the firm's report says, and the the price falls largely resulted from stamp duty changes announced in the 2014 Autumn Statement and uncertainty surrounding a mansion tax in the run up to the general election. Stronger growth was recorded in the lower value markets, particularly in the £750,000 to £1 million market where buyers benefited modestly from the stamp duty reform. In the prime markets below £750,000 although price growth was positive, it was slower as new mortgage regulations limit the amount buyers can borrow. Average values in Ealing are around 25% cheaper than Hammersmith and Chiswick and consequently saw the strongest growth, of 3.9% over the past year. 'Since the election some of the deferred pent up demand is beginning to flow back into the market, although the new stamp duty rates are still keenly felt by buyers at the top end of the market. This has restricted any significant increases in both prices and transaction numbers and we expect this to continue over the rest of 2015,' the report explains. Nonetheless, Savills is forecasting price growth to return to the market in 2016 and values to rise by 22.7% over the five years to the end of 2019. In the prime west London rental sector average rents increased by 1.2% over the three months to the end of June, leaving rental growth flat on an annual basis. But Savills says that corporate relocations play an important part in the west London prime rental market and are a growing source of demand. Over the first half of 2015 some 67% of tenants were renting due to employment relocation compared to 55% in 2014. 'Over the next five years, the London economy is forecast to continue strengthening, particularly in the technology and telecommunications industries, which will underpin demand for prime rental property over the medium term,' the report points out. However, it also points out that a potential risk to the sector is the level of new stock being brought to the market by overseas investors in certain locations on the fringes of prime London. In west London the largest prime development region is White City, which may lead to rents coming under pressure in the surrounding areas. But, across the prime London markets as a whole Savills expects rents to rise by 17% over the course… Continue reading
