Stamp duty cut saves first time buyers almost £300 million

Moving house in 2018

According to the latest figures released by HMRC, as many as 121,500 first-time buyers have saved £284 million since the cut to stamp duty was implemented during last year’s budget.

First time buyers purchasing homes of £300,000 and under now pay no stamp duty at all, and those who have bought properties of up to £500,000 will also benefit from a stamp duty cut.

Financial secretary to the Treasury, Mel Stride, said: “Once again, we can see that our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.

“In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.”

Michael McCarthy, developer at Equitas Properties, commented: “46% of our new home buyers benefited from the recently introduced stamp duty reduction. This policy allowed these new home buyers reduced acquisition costs while increasing options, choice and purchasing power.”

Shaun Church, director at mortgage broker Private Finance, added: “Stamp duty tax relief saved first-time buyers £125m in Q2 – making the regulation a ‘relief’ for new homeowners in more ways than one. Stamp duty has been the final hurdle for first-time buyers already struggling with mounting deposit costs for years. With this burden now eased or removed for most, and attractive low-rate mortgage deals for new buyers steadily trickling in, the path to homeownership is becoming clearer.

“Yet stamp duty continues to clog up other areas of the market. Transactions have risen quarterly but are lower than they were this time last year. Thanks to a tunnel vision approach to stamp duty relief where only first-time buyers benefit, all other homebuyers – from second-steppers to potential downsizers – are being dissuaded from moving due to punitive tax charges. This creates lack of movement further up the chain in an already sluggish market, and ultimately fewer options for buyers looking to move up and down.”

Original Source: Property Reporter

Almost all landlords are now choosing fixed rate mortgage products

A new report from Mortgages for Business has revealed that 93% of landlords financing buy to let property chose a fixed rate mortgage in Q2, with five year fixes being the most popular having being chosen by 69%.

The index also found that an increasing number of lenders are offering products free from arrangement fees. In Q2, a fifth (20%) of all products had no fee attached, up from just 14% in Q3 2017. Other incentives were also on the increase, including cash back, free valuations and free legals for landlords remortgaging property.

The average flat arrangement fee, however, increased slightly in the quarter to an average of £1,389, at less than £1,500 this still represents reasonable value.

Other findings in the index include that the number of lenders offering products to landlords borrowing via limited companies increased by three (The Mortgage Works, Kensington Mortgages and LendInvest) in Q2. Half of all buy to let lenders now offer mortgages to corporates.

Overall, pricing remained fairly flat in Q2 despite an increase in swap rates, suggesting that lenders continue to absorb costs in order to remain competitive.

Remortgaging continues to outstrip purchases, although there were still more buy to let purchase transactions by landlords using limited companies. At 8.6% HMOs produced the highest gross annual yields.

David Whittaker, CEO of Mortgages for Business, said: “We’ve been recommending five year fixed rates for a long time. At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52%. Why wouldn’t landlords make them a part of their business strategy?”

Report shows landlord confidence now at 18 month high

Rental yields

Although landlords’ confidence in rental yields dipped in the second quarter of 2018, the average rental yield currently being achieved of 6.2% is at its highest since Q4 2014.

Landlords in Wales and the East of England are generating the highest rental leads of 6.9% and 6.7% respectively. Rental yields are lowest in the North East (5.7%), the South East (5.8%) and Outer London (5.9%).

Tenant demand

Perceptions of tenant demand vary significantly cross the country with landlords in the East and West Midlands most likely to have experienced an increase in demand over the last three months (42% and 33% respectively). The largest increases in perceived tenant demand over the last quarter were seen by landlords in the East Midlands (+14%), Yorks & Humber (+11%) and the West Midlands (+7%).

Tenant demand is lowest in Inner and Outer London and the North East, although Scotland has the largest fall in perceived demand over the last three months at -15%.

Portfolio intentions

Looking at the plans landlords have for the next 12 months, those in the East Midlands (23%) and North East (21%) are most likely to expand their portfolios. Landlords in Central London and the South East are least likely to be looking to increase the number of buy-to-let properties they own (8% and 9% respectively).

Phil Rickards, Head of BM Solutions, said: “It is encouraging to see that confidence across all of the key indicators has either increased or stayed the same on a 12 monthly basis and is particularly strong when landlords are considering their own lettings business.

It’s a promising sign for landlords that rental yields are on the increase and are recovering some of the ground they have lost in recent years.”

Original Source: Property Reporter

BTL investors predicted to seek out low cost high yield properties

Buy to let investments will continue to offer attractive rates of return compared to other asset classes, but investors will increasingly search out cheaper and higher yielding properties says a special report commissioned by The Mortgage Lender to mark the launch of its buy to let products.

The report, authored by housing economist, Martin Ellis, also predicts that interest rates are set to rise by a quarter of a point in the next few months and that house price growth will have slowed to between two and three per cent a year by the end of 2018.

Peter Beaumont, The Mortgage Lender deputy chief executive, had this to say: “Our special report on the buy to let market looks at the macro and micro economic environment for buy to let investors and the factors that are likely to influence landlords’ investment choices over the coming years.

It also highlights the need for a flexible and competitive buy to let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased.”

Key factors impacting the buy to let market:

Private rented sector has grown strongly over the past decade…

The private rented sector has grown substantially in recent years. One in five (4.7 million) households in England now rent privately. Nearly half of 25 to 34-year olds live in the private rented sector (46%); almost double the percentage in 2006 (24%). There has also been a considerable increase in the proportion of 35-44-year olds in the private rented sector over the past decade, rising from 11% to 29%.

BTL mortgages have played a key role in supporting the expansion of the private rented sector…

BTL mortgages play a vital role in supporting housing supply in the private rented sector. The BTL mortgage market represents nearly 13% of new UK mortgage lending. The market grew from 840,000 BTL mortgages outstanding with a total balance of £93.2bn at the end of 2006, to 1.8m BTL mortgages with an aggregate balance of £214bn by the end of 20155; growth of 114% and 130% in the number and value of balances outstanding respectively.

In recent years, BTL was typically the strongest performing sector of the mortgage market. There were annual increases in the number of BTL loans to fund house purchase of 21% in 2014 and 17% in 2015. New BTL mortgages increased by nearly 200% between 2010 and 2016 with their share of all mortgages rising to 20% in 2015.

But BTL mortgages for house purchase have fallen more than a quarter due to stamp duty changes…

There was, however, a significant fall in the number of BTL property sales following the introduction of the stamp duty charge for additional properties in April 2016. BTL house purchase declined sharply immediately, but has remained broadly flat since then, albeit at a much lower level.

BTL house purchase activity in 2017 was more than a quarter (-27%) lower than in 2016 with BTL purchases made with a mortgage averaging 6,240 a month in 2017 compared with 8,500 in 2016.

In value terms, BTL house purchase lending fell by 28% in 2017, from £14.9 billion in 2016 to £10.7 billion. Despite this decline, the total for 2017 was still 67% higher than the annual average during the period from 2009 to 2013.

There has been a further weakening recently with the number of BTL house purchase loans in the first three months of 2018 totalling 11% lower than in the same period of 2017.

Whilst BTL remortgages have been largely stable

In contrast to house purchase BTL lending, BTL remortgage activity has been very stable with the volume of lending in 2017 only 0.6% lower than in 2016. As a result, remortgages’ share of total BTL mortgage lending rose from 60% in 2016 to 67% in 2017 in volume terms.

Original Source: Property Reporter

Vast majority of Brits want an environmentally sustainable home

New research by BLP Insurance, has shown that as many as 78% of people consider the environmentally sustainable performance of a building important when choosing a new home.

According to the findings, 81% of respondents in London think the long term environmental and sustainable performance of a new home is important versus Sheffield (68%) and Newcastle (75%).

When asked about environmentally sustainable features, almost a quarter of participants ranked energy efficient heating and hot water systems as their top priority if they were choosing a new home, followed by double glazing, and solar panels. Environmentally friendly fittings were seen as the main advantage of buying a new build home over an older property.

The research also highlights the slow uptake of smart meters with only 5% of respondents viewing this feature as important. The popularity of the technology varied among different generations, with 10% of 16-24 year olds versus 2% of over 55s citing smart meters as a significant addition to their new home.

New Minimum Energy Efficiency Standards (MEES) introduced in April this year and coming into force in April 2019 have drawn even more attention to the energy efficiency of properties, and landlords could face penalties if they fail to achieve an Energy Performance Certificate (EPC) rating of at least an E.

Kim Vernau, CEO of BLP Insurance, said: “As people become increasingly concerned about environmental issues, demand for environmentally sustainable features for new homes will continue to grow. Initiatives such as the Energy Efficient Mortgages Action Plan (EeMAP) will help finance an increase in sustainable homes by incentivising building owners to improve the energy efficiency of their properties or acquire already efficient buildings.

It’s not just buyers but prospective tenants that are more alert to sustainability. With more detailed and transparent data now available to consumers at all levels, and new energy standards being implemented, landlords and developers will need to adapt, taking steps to improve the efficiency of properties in the market.”

Original Source: Property Reporter

Research reveals gender gap among landlords in Britain

There is a gender gap among residential landlords in the UK with women’s income from property investment lower than that of their male counterparts, according to new research.

The average rental income for male landlords is £24,050 a year compared to an average of £22,550 for women, the data from property investment firm Knight Knox’s annual survey of landlords shows.

Compared to the results of last year’s survey, the income gap between male and female landlords has increased from 1% to 6% and the survey report points out that the figures echo Britain’s current gender pay gap among full time workers which stands at 9.1%.

‘Inequality and gender pay gaps have been a huge topic across the media over the past year and these figures seem to signal that similar issues may have made their way into the investment and buy to let market,’ said Andy Phillips, commercial director at Knight Knox.

‘That being said, the income does seem to be aligned with experience. Male landlords have almost two years more experience on average, and this is likely to have some impact on the returns generated by renting out property,’ he pointed out.

They survey also revealed that renting out property is the main source of income for 31% of female landlords, whereas just 17% of men rely primarily on their property investment and overall women were underrepresented in the results, with the gender breakdown showing 40% female participation.

‘Property investment is clearly a male dominated market and there is potentially more to be done to attract female investors to level out the playing field,’ said Phillips, who added that recent research by YouGov showed that women take less risk and are more focused on avoiding losses than generating gain from investments.

‘Women will dig deeper to understand the market before diving into the unknown, so accurate and jargon free advice tends to be more important than when dealing with male investors,’ he concluded.

Original Source:Property Wire

The changing face of retirement living in the 21st Century

Retirement Living

The days of silver-haired pensioners whiling away their golden years playing bingo in an uninspiring common room are over.

Retirees want a community, good transport links, access to amenities and culture and modern facilities. Over 60s in the UK currently total 11.8m and are set to increase by 20% over the next decade, meaning demand for retirement developments that tick all these boxes is on the rise.

According to Europe ILU and PwC’s 2018 Emerging Trends in Real Estate Report, the retirement and assisted living sector is now second only to logistics. In the UK, where age restricted living accounts for just 2.6% of all housing stock, there is considerable scope for growth.

Projects such as Pacalis Ltd’s Harrier Way in Petersfield and Audley Care’s Clapham Common development are at the vanguard of the UK’s changing retirement market. Audrey Care’s luxury urban development will boast care facilities, a residents’ lounge, a restaurant, pool and spa, alongside transport links to central London and a host of local amenities. It is due for completion in 2020.

By contrast, Harrier Way is an excellent example of a more rural retirement development. Built on a greenfield site in the South Downs Natural Park, this bespoke village will offer residents exclusive access to a club house, library, bar, café, restaurant, beauty facilities, gym and guest accommodation, all within easy reach of an establish commuter town.

Both are markedly different from the retirement developments in the US, Australia and some European nations. Here, residents have been enjoying exclusive access to golf courses, swimming pools, education centres and healthcare facilities for nearly three decades. In some areas, retirement housing has now developed beyond simply ‘active retirement living’ to address wider social concerns, such as boredom, loneliness or the cost of student accommodation. Lasell Village in Massachusetts, for example, provides retirees with access to collegiate classes, in return students are employed by the village to help pay their tuition fees. In the Netherlands, the Residential and Care centre Humanitas provides free accommodation to six students in return for 30 hours of volunteer work a month.

There are lessons for the UK’s retirement sector to learn from these more developed markets, both good and bad. In Australia, where residents typically buy a license to occupy units rather than the homes themselves, a backlash against operators seen as commercially focused and ‘money-grabbing’ is already underway. In New Zealand, where the number of over 75s living in retirement villages has grown by 33% over the last decade, a mutiny is also brewing– with some residents pushing for more transparency and a less commercial mindset from operators.

In the UK, changes in leasehold practices and the abolition of ground rents dealt a heavy blow to Britain’s biggest retirement housebuilder McCarthy & Stone, which issued a profit warning in June. But for the new wave of retirement developments and the residents set to live in them, these policies could help prevent the growth of solely commercially focused developments, such as those seen in Australia and New Zealand. Residents in Picalis’s Petersfield development, for example, will buy their homes leasehold, with an annual service charge used to support the village’s facilities. They’ll keep the security of home ownership and benefit from any capital gains if their property appreciates.

That’s not to say there are no opportunities for investors in the UK market. Indeed, retirement living is now structured as a mini-asset class within property, and investors benefit from the greater uniformity of retirees’ characteristics compared to the general public. The appeal to the affluent over 60s cohort is another draw for investors (Knight Frank estimates the unmortgaged housing wealth of this group to be £1,200bn in England alone). At the luxurty end of the market, retirement homes can command sale premiums of 30% compared to equivalent non-retirement housing in the same area.

Original Source: Property Reporter

First time buyers outstrip movers for first time in 23 years

The latest data and analysis from Lloyds Bank has shown that the number of people moving home has dipped in the first half of the year and now account for only 49% of the housing market – the first time homemover numbers have fallen behind first-time buyers since 1995.

According to Lloyds, there were 170,000 homemovers in the first half of 2018, down by 1,700 (1%) compared with the same period last year and down by 33,000 (16%) from the second half of 2017. This inactivity may be being fuelled by a shortage of suitable properties for sale but reflects the broader housing market which is showing little sign of movement.

The fall in homemover numbers follows a rise in 2017, which reported the highest level of movers in 10 years. This also coincides with a 3% rise in first-time buyers to 175,500, so that for the first time since 1995, just under a half (49%) of all house purchases financed by a mortgage were made by homemovers – down from 62% in the first half of 2011.

Andrew Mason, Lloyds Bank mortgage products director, said: “Despite continuing low mortgage rates, the homemover market has stabilised with little movement in the first half of this year to leave first-time buyers now driving housing activity. This may be in part due to the Help to Buy scheme enabling first-time buyers to purchase a new property, combined with the low availability of the ‘right type’ of homes for those looking to move up the housing ladder. The costs of moving house and potential further interest rate rises may also be weighing on potential homebuyers’ minds.

However, it is good to see the number of first-time buyers increasing, helping to keep some movement along the property ladder.”

Record highs

Over the past five years, the average price paid by homemovers has grown by 35% (£77,457) from £219,479 in 2013, to £296,936 in 2018 – a record high.

In East Anglia, the average price a homemover pays has grown by 46% since 2013 to £305,612, the highest rate of growth in the UK. Greater London and the South East follow with 45% growth in average property prices since 2013 – Greater London has the most expensive homemover homes with an average price of £566,200, followed by the South East (£412,759).

The least expensive homemover homes can be found in Northern Ireland with an average price of £170,031.

The average deposit put down by a homemover has also increased by 31% in the past five years, from £76,303 in 2013 to £99,592 in 2018. Not surprisingly Londoners put down the largest deposit of £189,167 towards the purchase of their next home, which is nearly four times the average homemover deposit of £48,003 in Northern Ireland.

However, whilst Londoners put down the highest deposit in monetary terms, homemovers in the South West and East Anglia contribute the largest deposit as a proportion of average house price – 38% (£117,892 and £116,278 respectively in cash), followed by South East (35%). (Table 3)

More outright home owners than those with mortgages

Of the estimated 23.1 million households in England, 14.4 million (63%) were owner occupiers. This remained unchanged in 2016/17. However, the composition of owner occupation rates has moved towards an increased proportion of outright owners (34%) versus mortgagors (28%), partly explained by large numbers of baby boomers reaching early retirement age. So, whilst homemovers with mortgages are stabilising, the bigger picture may be that this is in part because homemovers who don’t need a mortgage are on the increase.

In 2006-07, about three quarters (72%) of those aged 35-44 were owner occupiers. By 2016-17, this had fallen to half (52%). While owner occupation remains the most prevalent tenure for this age group, there has been a considerable increase in the proportion of 35-44 year olds in the private rented sector (11% to 29%).

Original Source: Property Reporter

How much would we spend to make a rented property feel like home?

How much would you spend to make a rental property feel like home

A new survey also reveals that a surprising number are happy to rent long-term

Along with the weather, ever-rising house prices must be one of the most discussed subjects in the country. So is it any wonder that more and more people are resigning themselves to a life of renting? In fact, according to a new survey by Sofology, a third of renters have no intention of getting on the property ladder. That’s the equivalent of 1.48million households in the UK.

When asked if they thought owning a home was important, 31 per cent said no. And just over a quarter (26 per cent) said they didn’t want the responsibility of home ownership. But what we found most fascinating was that 83 per cent felt settled in their rental homes, and 61 per cent were happy renting. Are we about to see a cultural shift from buying to renting? The French and Germans prefer to buy, rather than rent, so why not us?

Amazingly, one in 20 of those surveyed admitted to spending more than £3,000 a year on decorating their rented home, while the average figure was £490. The most popular spends were on redecorating (29 per cent), furniture (25 per cent) and home accessories (11 per cent).

‘We were surprised to find that the majority of renters are happy with their living arrangements and have no plans to buy a property,’ says Sofology’s Andy Leadbetter. ‘It shows a clear shift in societal norms. You don’t have to own somewhere to make it feel like your home. Our study shows that renters have become accomplished in making their house a home and with half saying they have already been renting for 10 years or more, it’s clear they plan on staying put. People who add their own home accessories and finishing touches with items like light fittings and photographs create a sense of home, but the majority say that adding their own furniture was the best way to feel settled.’

Original source:Ideal Home

Mortgage approvals in June continue to rise year on year

mortgage approvals continue to rise

The latest data from e.surv has revealed that first-time-buyers are continuing to come out in force as the housing market sees another monthly increase in mortgage approvals.

e.surv found that overall, there were 66,435 mortgages approved during June, 3% higher than in the previous month, with 23.4% of the total UK mortgage market going to small deposit borrowers. According to the report, this is higher than the 22.4% recorded in May and continues a recent trajectory which has seen small deposit borrowers increase their share of the market.

The top location for small deposit borrowers was Yorkshire, with 33.7% of all loans going to these customers, compared to just 16.2% in London. The North West enjoyed a similar rate of small deposit buyers, recording 32.1% this month, followed by Northern Ireland with a rate of 28.1%.

However, Northern Ireland displaced London as the part of the UK with the highest proportion of buyers with large deposits.

In this region 39.8% of all approvals were to borrowers of this kind, ahead of London where the figure was 38.5%.

Richard Sexton, director at e.surv, commented: “While the housing market appears to have plateaued in some areas, there was good news for those looking to borrow to fund a house purchase.

Mortgage approval rates are up both compared to last month and the same point a year ago, suggesting that lenders are offering deals which are tempting more borrowers to the market. Speculation about a potential base rate rise in August may increase interest, as more borrowers look to lock in a low mortgage rate before any increases take place.

It really is a postcode lottery as to the local market you experience. Areas of London and the South East continue to be dominated by cash buyers and those with large deposits. Yet the opposite is true in areas of northern England, where there are better opportunities for those with small deposits to get onto the property ladder.

But with lenders offering low rates across the whole country, now is a good time to lock into a cheap mortgage deal before rates eventually begin to rise once more.”

Original Source: Property Reporter