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First time buyers in UK giving up on their dream of owning a home, poll suggests
A generation in the UK has given up on the dream of owning their own home as a result of the property boom, according to a survey by a legal firm. The hopes of thousands of first time buyers have been dashed by runaway property prices, the need to secure huge deposits and job insecurity, the poll of under 45s who have yet to buy has found. More than half, 51%, of 25 to 45s thought they had little or no prospect of ever owning their own house with 40% of those aged 35 to 44 who were still struggling to get on to the property ladder believing they will never be able to afford their own home. Overall one in five said they have been left totally disillusioned by the current state of the property market and nearly one in three said they were having to cut back on essentials, such as food and heating, at the end of each month in order to save for a home. A third had taken on extra shifts or another job to raise funds while a fifth have chosen to move back with their parents so they could get some savings behind them and nearly half questioned were going without holidays. But a large majority of those questioned revealed they were not aware of or had not looked into other ways of getting on to the property ladder. The survey by property law experts Slater and Gordon found that those who were actively saving for a place had managed to bank on average just £10,570 towards a deposit but needed at least three times that amount to feel they stood any chance of securing a home and affording stamp duty. ‘It can be incredibly dispiriting for people saving towards their first home to see an unrelenting rise of house prices. But there are a lot of schemes and incentives out there that people just don't know about. It is possible to do it with the right financial planning early on,’ said Stephen Lintott, head of property law at Slater and Gordon. ‘The recent changes to stamp duty land tax may have helped in the short term, but in the long term the supply of housing needs to be boosted, perhaps by a reform of planning and tax laws and the rental market needs to respond to changes in how people want to rent,’ he added. The survey also found that just 39% of those trying to get a deposit together have managed to leave their savings untouched and 61% said the simple cost of living, such as everyday essentials, unexpected bills and clothes, meant they have to dip into their funds. One in 10 said they felt trapped by the high cost of rent while one in five said ownership was less realistic for them than previous generations. But nearly four in five of under 45s had never heard of or explored the option of shared ownership schemes,… Continue reading
UK private rented sector index shows marginal hardening in yields
Total returns from private rented sector investment grade blocks in the UK slipped towards the end of 2014, according to the latest sector index. This was the result of slightly more modest capital growth and a moderate slowdown in average rental growth across the six cities monitored by the Knight Frank index. The trend in capital growth reflects the wider market, with average pace of growth UK residential prices for owner occupied properties also easing from 11% annual growth in the summer to 7% at the end of the year. Average initial gross yields in London, Leeds, Bristol, Birmingham, Manchester and Glasgow were 6.3% in the fourth quarter of 2014, the index also shows. Overall, average total returns at 11.2% in the quarter and average capital growth was 6.5%, down from 7.3% in the second quarter of 2014. Gross yields ranged from 4.2% in central London to 8% in Leeds. ‘It is interesting to note, however, the shallower discounts on offer on institutional grade blocks, a reflection of the increasing interest in the PRS sector in some key city markets,’ said Grainne Gilmore, head of UK residential research at Knight Frank. The report shows that in the fourth quarter of 2013, the average discount on offer for purchase of whole sale block in Manchester was 13% but this has now fallen to 11%. Likewise, average discounts in Birmingham have fallen from 14% to 12% over the same period. The research also shows that the fundamentals for private rented sector investment blocks remained regionalised in 2014, with capital growth ranging from 3.2% in Bristol to 11.4% in outer London in the fourth quarter. Average rental growth was also spread over a wide range across the UK, not only by region but by type of property. Annual growth in rents in a typical ‘secondary block’ in London Zones three to six rose by 0.96%, while average prime blocks in Manchester saw annual rental growth of 2.99%. The regions also commanded the highest yields, with average gross initial yields in Birmingham of 7.9%, and Leeds of 8%. In contrast, yields were tightest in central London, at 4.2%. The research shows that over the past 12 months there has been a sustained increase in momentum within the PRS sector from both large institutional investors and smaller developers. ‘As the investment market becomes increasingly familiar with PRS fundamentals, we have witnessed a notable rise in capital injections within key regional centres such as Manchester,’ said Lucy Jones, head of investment lettings and management at Knight Frank. ‘Occupier demand for rental accommodation is strong in these locations, with good take up levels, low void periods and relatively high yields. Due diligence remains a prerequisite amongst investors, meaning that financial viability modelling for proposed schemes has never been more important,’ she explained. ‘We are also seeing divergence among clients about the type of approach they favour in terms of their investment. They may be planning to be hands on, which means we will… Continue reading
Proposals published on improvements for buyer and seller protection in Scotland
The Law Society of Scotland has published a report following an independent review of consumer protections for people buying and selling property in Scotland. The review, by former Sheriff Principal Edward Bowen, examined the current consumer protections in place as well as conveyancing practice and the existing legal framework. It followed high profile and complex cases in Aberdeenshire and West Lothian where clients were left without proper title to land bought through residential property transactions. The Law Society provides a number of consumer protections for people using Scottish solicitors. This includes its Guarantee Fund, a fund of last resort which seeks to compensate clients who are the victims of a solicitor’s dishonesty. The Society also arranges for the Master Policy, a single policy of professional indemnity insurance, to ensure firms are covered for cases involving negligence. Bowen concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual, and did not suggest a fundamental problem with conveyancing practice. His report makes a number of recommendations, including consideration of the widening of the scope of the Guarantee Fund, and a possible change to the name of the fund to avoid confusion. Some changes would be likely to require changes to the legislation governing the fund. It also recommends amending the guidelines for discretionary powers for the Guarantee Fund to provide discretionary assistance in restricting continuing losses in certain circumstances and the possible introduction of a new system of protection for purchasers of newly constructed houses to protect from insolvency. This would have to be brought forward by Scottish Ministers. ‘We have an important duty to protect the interests of the consumers of legal services, a responsibility which we take extremely seriously. The vast majority of Scottish solicitors provide an excellent service for their clients, but we need to ensure that we have a robust set of consumer protections to help clients in those very few occasions when things go wrong,’ said president of the Law Society of Scotland, Alistair Morris. ‘These difficult and very complicated conveyancing cases in West Lothian and Aberdeenshire left some questioning if the existing protections are sufficient. That is why we commissioned an independent review to look at the issues arising from these cases, current conveyancing practice and existing Scots law, to see what lessons can be learned for the future,’ he explained. ‘Overall, the report provides reassurance that there are no fundamental or underlying problems with Scots property law and solicitors’ conveyancing practice. It is notable that Sheriff Principal Bowen has concluded that the cases in Aberdeen and West Lothian arose for very different reasons and were highly complex and unusual,’ he added. He also pointed out that these findings are reassuring for both the legal profession and members of the public who rely on the knowledge and expertise of their solicitor when buying a new home. ‘We fully appreciate however, that it does not provide much comfort for the people… Continue reading
