TSI
Call for UK mortgages to be more user friendly for older people
Building Societies in the UK are being urged to review the maximum age limits for mortgage borrowers to support home owners needing finance into and in retirement as life expectancy rises. This is one of nine recommendations contained in an interim report entitled Lending into Retirement, from the Building Societies Association (BSA) which points out that the UK already has 11.6 million people over the age of 65. By 2034 it is estimated that around a quarter of the population will be 65 plus and lifestyle changes, including divorce, mean that people are tending to buy later and go for longer repayment terms. BSA research shows that around half of 25 to 34 year olds think they will need a mortgage that lasts into retirement and the average age of an unassisted first time buyer has already hit 31. The report also calls for more availability of suitable housing options for older home owners who want to move to a property that meets their changing needs and better cross departmental co-ordination to rationalise Government policy on the treatment of older borrower’s housing wealth. It would also like to see the delivery of regulation that encourages innovation along with the provision of clear information that empowers older consumers and points out that working with insurers would develop policies that enable lenders to mitigate the different risks involved in lending to older borrowers. Other areas for improvement include make holistic financial planning in retirement available, the formation of a cross-industry alliance with other bodies focused on the needs of older consumers and the creation of a mortgage product that adapts to the different stages of a person’s life. ‘We have been working together as a sector to look at this issue and we are making some early recommendations for change. Some put the ball firmly in our court, others can only be delivered in partnership and a few may require regulatory change,’ said Dick Jenkins, chair of the BSA. He explained that the Financial conduct Authority has been involved in preparatory work. ‘We have also sought the views of many others and these will now contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement,’ he added. According to BSA head of mortgage policy, Paul Broadhead, it is natural for the building society sector to kick-start and lead this work. ‘We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances,’ he said. ‘As the average age of a first time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending. This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement,’ he added. ‘The time… Continue reading
Central London office rental values hit double digit annual growth
Rental values in central London’s booming office market grew by 10.3% in the year to October 2015, the first time annual growth has hit double digits since April 2008. The capital saw 1.1% growth in October, as demand for office space continues to overwhelm limited availability, according to the latest CBRE Monthly Index. Despite rapidly rising rents, take-up of offices in central London continues to outpace the 10 year average. Some 3.6 million square feet of space was snapped up by businesses in the third quarter of 2015, with a further 3.8 million currently under offer and expected to complete before the end of the year. Office rents aren’t just rising rapidly in London. Rental values in the office sector grew by 1% across the UK last month, only the third time rents have grown this quickly since the financial crisis, and much faster than the 0.4% seen across commercial property as a whole. Capital values are also growing fastest in the London office market, at 1% in October, some way ahead of the 0.6% for offices outside London, and twice as fast as the 0.5% growth seen across all commercial property. Together, the rising rents and capital values in the UK office market are giving investors total monthly returns of 1.2%. This strong rental value growth means that UK offices are now highly reversionary. The average initial yield for UK offices is now 4.1%, below the pre-crisis low of 4.2%. This compares with the average equivalent yield of 5.4%. The position is even more marked in central London Offices where the average initial yield of 3.1% compares to an average equivalent yield of 4.5%, although strong income growth has closed the gap over the last few months. ‘London’s office market has been heating up for some time now, but there is still strong business demand across the capital,’ said Kevin McCauley, head of central London research at CBRE. ‘Rental value growth has not been this sustained since before the financial crisis, and together with rapidly rising property values, landlords and investors are experiencing a booming market,’ he added. Continue reading
The value of housing stock in the UK reaches over five trillion
The value of UK's private housing stock in August 2015 reached an estimated at £5.1 trillion, a rise of 53% over the last decade, with London doubling since 2005. The increase of £1.8 trillion since 2005 is equivalent to £76,316 per household in the owner occupied and private rented sectors and means that the value of the UK private residential housing stock has grown at a faster rate than consumer prices, with the retail price index up by 35% in the past decade. In the past year, the value of private housing stock grew by £262 billion, mainly reflecting average house price growth of 4% in the year to August, according to the research from the Halifax. The research also shows that the value of mortgage debt has also grown, up by 35% since 2005 from £942 billion to £1.28 trillion. Nonetheless, the value of the private housing stock has grown by over five times as much as outstanding mortgage debt at £1.8 trillion compared with £334 billion. As a result, housing equity has increased by £1.4 trillion or 60% over the decade from £2.4 trillion in 2005 to £3.8 trillion. Regionally, there is a wide variation in the level of housing equity, with a higher balance in the south compared to northern areas. The highest is in London where housing equity is estimated at £798 billion, which is equivalent to £305,749 per household. The next largest is South East at £722 billion or £223,197 per household, and the East at £461 billion or £212,263 per household. Outside southern England, the highest equity levels are in the North West at £283 billion or £109,043 per household, the West Midlands at £251 billion or £128,703 per household and Scotland at £241 billion or £124,679 per household. ‘The combined value of all privately owned houses in the UK is estimated at close to £5.1 trillion in 2015. The increase in total housing value over the past decade is equivalent to over £76,000 per privately owned property,’ said Martin Ellis, housing economist at the Halifax. ‘Aggregate net housing equity held by UK households is in a healthy state with total housing assets worth nearly £4 trillion more than the total value of mortgage debt. Despite the rapid rise in mortgage debt over the past 10 years, net housing equity has grown by £1.4 trillion since 2005,’ he added. The research shows that there has be a strong rise in the value of the private housing stock across all regions, with values more than doubling in London at 105% from £552 billion to £1.1 trillion over the decade. The next largest increases were in Scotland at 72% or £136 billion, the South East at 55%, the East at 54% and the South West at 36%. The value of housing in the north increased by 36% compared to 66% in the south during the last ten years. As a result, the South's share of total UK housing assets rose… Continue reading
