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UK equity release market sees record start to the year
The equity release market in the UK has seen a record start to 2016 with lending reaching £393.9 million, the highest for a first quarter on record. This kind of lending is now up 21% compared with last year and new equity release plans have reached over 5,000 for the first time since 2009, the data from the Equity Release Council also shows. This year is the 25th anniversary of the first industry standards being developed for equity release and now drawdown popularity is continuing to increase its market share. With new loans rising, they have now reached the highest amount ever recorded as home owners make use of their housing wealth to supplement their monthly income, make home improvements, support younger family members with buying a property or pay for the trip of a lifetime. The data also shows that the market share of drawdown lifetime mortgages products has increased slightly year on year and it remains the most popular product. The value of drawdown products accounted for 60% of all loans, while the volume of loans was 67%, up 1% and 2% respectively from the first quarter of 2015. There were 3,450 drawdown loans agreed in the first three months of 2016, up 9% on the same period in 2015. Their value was £234.5 million, up by 22% in the same period. The value of lump sum mortgages accounted for 40% of total lending in the first quarter and 33% of the total volume of loans. The value of lump sum mortgages was £158.8 million, up 19% from the first quarter of 2015 and the value of home reversion plans sold remains less than 1% of the market. ‘These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later life. In a year that marks the milestone of 25 years of safe equity release, the market is continuing to build on the momentum of recent years,’ said Nigel Waterson, chairman of the Equity Release Council. ‘The recent decision from the Financial Conduct Authority to reduce affordability assessments for Lifetime Mortgages is a positive development that will help more people benefit from all that equity release has to offer. For a generation that are often asset rich and cash poor, their home is likely to be their greatest asset and should form part of everyone's planning for retirement,’ he pointed out. ‘As we look forward to the next 25 years, it is important now to maintain expert adviser support for customers as the sector grows, as well as continuing to innovate to satisfy customer demand, all the while preserving standards and consumer protections,’ he added. According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, the figures highlight more clearly than ever how equity release is now an integral part of financial planning for retirees across the UK. 'The sector is… Continue reading
UK’s Home Counties prime property rents seen as competitive
Prime rents across the Home Counties in the UK rose by 0.9% in the first three months of 2016, and on an annual basis rents were 1.7% higher than a year previously. The annual figure is down from 4.7% in March 2015, according to the latest Knight Frank index report which says that this moderation in annual rental growth reflects a desire from landlords to remain competitive in what is increasingly becoming a tenant’s market. The index report also shows that the number of tenancies agreed between January and March was nearly 10% higher year on year and there was a 31% rise in enquiries from individuals relocating for work both from London and internationally. However, the rental market has continued to be location specific with Guildford and Beaconsfield seeing the highest levels of rental growth so behind these headlines a number of submarket trends exist. While activity has been focused on the sub £4,000 per month price bracket so far in 2016, with such tenancies accounting for over 50% of deals over the year to date, there has also been a pick-up in interest for lets of £10,000 and above after a fairly subdued 2015. The report says that landlords of larger properties have been more willing to negotiate on rents which reflects the relatively high levels of prime stock on the market, and a desire to keep void periods to a minimum. ‘This greater flexibility at the top end of the market, and the continued demand for smaller family homes close to good schools, underpinned a 9% increase in the number of tenancies agreed across the Home Counties between January and March compared to the first quarter of 2015,’ said senior analyst Oliver Knight. He pointed out that there was also an uptick in demand from individuals relocating for work both from London and internationally, with 31% more corporate enquiries compared to the previous three months. ‘However, more volatile economic conditions and a weaker financial services industry mean corporate budgets have been reduced. The European Union referendum in June is likely to heighten this mood of uncertainty in the short term,’ he added. Continue reading
Official figures confirm buying frenzy in UK in run up to stamp duty change
Official figures from HMRC confirm that there was a large increase in property sales in the UK in March 2016 which was associated with stamp duty change. House sales were 77% higher than March 2015 and 75% up month on month and the HMRC report states this must be directly linked to a rush to buy ahead of the new 3% stamp duty charge for additional homes. There has been plenty of anecdotal evidence that buy to let investors were rushing to beat the 01 April deadline and this is now confirmed. However it is likely that sales in April will fall considerably as a result of the frenzy. Even the seasonally adjusted estimate shows that the number of residential property transactions increased by 41.5% between February 2016 and March 2016 and increased 69.7% compared to March 2015. ‘The large increase in transactions for March 2016 is likely to be associated with the introduction of the higher rates on additional properties in April 2016,’ the HMRC report says. ‘Additional non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase,’ it adds. The HMRC figures also shows that for March 2016 the number of non-adjusted residential transactions was about 74.8% higher compared with February 2016. Lucian Cook, Savills head of residential research, pointed out that even on a seasonally adjusted basis volumes were up 40% on February 2016 against a backdrop of economic uncertainty, the forthcoming referendum on the future of the UK in the European Union referendum and no loosening of mortgage lending criteria. He also pointed out that the latest data from the Council of Mortgage Lenders shows mortgage lending was 43% higher in March compared to February, and 59% higher than March 2015. ‘This suggests that while borrowing to support this uplift in sales volumes has been significant, there has also been a notable weighting towards cash buyers. All these figures confirm a frenzy of buying activity before the 01 April introduction of the 3% stamp duty surcharge for additional homes purchases,’ Cook explained. ‘It underscores the significant distorting effect that stamp duty changes can have on the housing market. This is clearly a one off event and such volumes are unsustainable against a backdrop of economic uncertainty and the prospect of an increased regulatory environment for buy to let borrowing,’ he added. ‘We’d expect a significant fall in transaction levels in the second quarter of the year to offset the March activity and the stamp duty surcharge to act as a longer term drag on housing transactions,’ he concluded. Doug Crawford, chief executive officer of My Home Move, said that March was the busiest month the business has ever seen with a record number of transactions. The busiest ever day for completions was 31 March, reaching a total of 1,120 in the single day. ‘The new stamp… Continue reading
