Written By Em

Em

Em Morley

CML Changes Mortgage Lending Forecast for the Year

Published On: July 22, 2015 at 10:56 am

Author:

Categories: Finance News

Tags: ,,,

A stable economy should support a steady improvement in housing and mortgage market activity in the next few months, according to the latest forecast by the Council of Mortgage Lenders (CML).

CML Changes Mortgage Lending Forecast for the Year

CML Changes Mortgage Lending Forecast for the Year

The CML market review report says that this follows a quiet market over the past year, which has caused the CML to revise its expectations for gross mortgage lending to £209 billion in 2015, from the previously predicted £220 billion.

Chief Economist at the CML, Bob Pannell, comments: “Several of the Government’s fresh housing initiatives will take time to take effect and so do not fundamentally reshape market prospects this year or next, as far as we can judge at this stage.”

The report states that although house prices have increased and growth is continuing to surpass earnings in most of the country, the potential for lending is likely to be restricted by affordability pressures, strengthened by the Mortgage Market Review (MMR) and macro-prudential rules.

It also says that any negative perceptions of the buy-to-let sector could be wrong, as remortgaging activity accounts for over half of overall buy-to-let lending, a much larger share than for homeowner loans.

Pannell continues: “Although buy-to-let business volumes continue to expand, the underlying pace of growth in buy-to-let activity, both for house purchase and refinancing, has been slowing, following its strong recovery over the past few years. Policy interventions in the buy-to-let space may reinforce this downward trend.

“We expect a further improvement in arrears and possessions this year and anticipate that the overwhelming majority of borrowers will cope with the modest interest rate increases that start in 2016.”1 

Generally, the CML is more optimistic about housing market developments now than it was at the start of the year and Pannell claims that this is due to the continuing strength of cash transactions, which have accounted for almost 37% of all transactions over the past year.

He adds that regulated house purchase activity has continued to decline compared to the market as a whole in the last year, which has pulled down the CML’s overall mortgage lending predictions for 2015.

1 http://www.propertywire.com/news/europe/uk-mortgage-market-activity-2015072010770.html

Landlords likely to raise rents following tax changes

Published On: July 22, 2015 at 10:28 am

Author:

Categories: Finance News

Tags: ,,

Fresh research has indicated that a number of landlords plan to increase rents on the back of tax changes announced in the Budget. This is despite the Government insisting that changes to the way landlords are taxed will see rents stay largely even.

Rises

Earlier this month, the Chancellor announced that mortgage interest tax relief for landlords is to be capped at the basic rate of income tax. A report from the Residential Landlords Association indicates that 65% of landlords are considering rent rises as a direct result of these alterations.[1]

In addition, landlords will be stripped of their automatic entitlement to a wear and tear allowance for their homes, which will leave them with no funds in the event of generic problems.

HM Revenue and Customs has forecasted that the changes will have no impact on rent levels. Mr Osborne believes that landlords are taxed more favourably than home owners. However, the Institute for Fiscal Studies and Policy Exchange have warned that this is not correct, pointing out that unlike property owners, landlords are taxed on rental yields and capital gains.

Landlords likely to raise rents following tax changes

Landlords likely to raise rents following tax changes

Reality

‘The reality is that the chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct,’ said Alan Ward, chairman of the RLA. He believes that, ‘rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.’[1]

‘The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different. It’s time the Treasury recognised residential landlords as a business,’ Ward added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/7/landlords-considering-post-budget-rent-increases

 

 

Right to Buy Plans Halted

Published On: July 22, 2015 at 9:59 am

Author:

Categories: Landlord News

Tags: ,,,

Gove’s cladding plans are ‘based on lazy and false assumptions’, says NRLA
Right to Buy Plans Halted

Right to Buy Plans Halted

The House of Lords has halted plans to extend the right to buy scheme to housing association tenants.

Labour and Liberal Democrat peers have teamed up to push through an amendment to the Charities (Protection and Social Investment) Bill by 257 to 174.

This requires the Charities Commission to ensure organisations are not forced to sell assets in a way that is “inconsistent with their charitable purposes.”1 

Lord Bridges, Cabinet Office Minister, has called for peers to wait until the new Housing Bill.

1 Yeatman, D. (2015) ‘Right-to-buy plan blocked by Lords’, Metro, 22 July, p.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

E-conveyancing initiative reaches landmark

Published On: July 22, 2015 at 9:19 am

Author:

Categories: Landlord News

Tags: ,,

Edinburgh Solicitor Property Centre claims to have reached a landmark with its new e-conveyancing service.

Entitled Central Conveyancing, the system has been developed between ESPC and BDP Software for Estate Agencies. The aim of the system is to speed up the conveyancing process, alongside providing a quick, accessible and transparent electronic record for all parties per transaction.

Testing

After being tested both on and offline by some ESPC members, the system is now to be rolled out to a wider number of offices. In a statement, the centre said, ‘this further testing will allow for a fully-developed platform to be available nationally in the near future.’[1]

‘The system we’ve created offers an unrivalled level of capability, ‘said ESPC chief executive Paul Hilton. ‘Not only has it been carefully designed to be user friendly, it has the ability to greatly improve risk management assuring all parties a secure and supported experience.’[1]

E-conveyancing initiative reaches landmark

E-conveyancing initiative reaches landmark

Mr Hilton continued by stating, ‘Conveyancing Central will create a system whereby as soon as a property is marketed a new case will be automatically created alleviating the need for double keying information. Once a buyer is found all key stakeholders will have access to the case including purchasing and selling solicitors, the home seller and buyer and their legal search providers.’[1]

[1]https://www.estateagenttoday.co.uk/breaking-news/2015/7/major-milestone-reached-for-e-conveyancing-initiative

 

Where do Londoners Move to When they Leave the Capital?

Published On: July 22, 2015 at 8:56 am

Author:

Categories: Landlord News

Tags: ,,,

London’s spiralling rent prices are forcing some residents to leave the capital and search for cheaper accommodation. So where do they go?

The London commuter belt is the most popular choice, with 50.3% of Londoners leaving the capital staying in the South East, according to Homelet.

Broadstone, a small town in Dorset, is the most popular choice.

Where do Londoners move to?

Area

Amount of former Londoners
Broadstone 4.1%
Brentwood 3.3%
Colchester 2.8%
Brighton 2.3%
Reading 2.3%
Manchester 2.3%
St Albans 2%
Bristol 2%
Basildon 1.9%
Luton 1.9%

Of those leaving London, 4.1% move to Broadstone, over three times as many as those that move to more obvious choices, such as Guildford at 1.2% and Sevenoaks at 1.1%.

Broadstone is in a typical retirement area, which includes Poole, indicating that it is likely that these movers are retirees leaving the capital rather than professionals seeking a new career. However, movers are keen to stay in the South, often within commuting distance of London.

Most popular regions for those leaving London

Region

Amount of former Londoners
South East 50.3%
South West 18.9%
East Midlands 6.5%
North West 6.1%
West Midlands 5.7%
Yorkshire & the Humber 4.5%
East Anglia 2.6%
Scotland 2%
Wales 1.3%
North East 1.1%
Unknown 0.8%
Northern Ireland 0.3%
Channel Islands 0%
Where do Londoners Move to When they Leave the Capital?

Where do Londoners Move to When they Leave the Capital?

Just out of the top five is Manchester, with 2.3% of former Londoners. Bristol follows at 2%.

Both Manchester and Leeds are less popular destinations for those leaving London than before the financial crisis, signalling that the economic recovery is uneven.

Homelet found that 0.3% fewer people moved from London to Manchester between 2014-15 than 2007-08, a pattern reflected in Birmingham with 0.4% fewer and Leeds with 0.65% fewer.

High rent costs are almost certainly a factor in Londoners’ reasons to leave.

At an average of £1,515 per month, the capital’s rents are almost £600 more than the UK average and around £800 more than the UK average when London is excluded.

Annual change in average rents

Region

Annual change
South West 11.1%
South East 11%
Greater London 10.1%
Scotland 9.6%
North East 8.4%
East Anglia 7%
Yorkshire & the Humber 4.8%
West Midlands 4.6%
East Midlands 3%
Northern Ireland 2.8%
Wales 2.6%
North West 0.2%
UK average 11.6%
UK average excluding London 7.8%

Additionally, rents in London are increasing faster than most places in the country. Greater London’s rent growth has exceeded all regions, apart from its neighbouring areas. And at 51%, the increase in the average rent since 2007-08 is the largest by far.

Despite the sky-high rents, eager professionals will always see London as an area of great opportunity.

Homelet found that it is the fifth most popular city for new residents to move to – people moving from outside the capital sign 18% of new tenancies in London.

New tenancies going to new residents 

Area

Amount of new tenancies going to new residents
Wakefield 28%
Coventry 26%
Brighton 24%
Nottingham 20%
Greater London 18%

London’s 18% figure is 7% higher than the 2007-08 number, when just 11% of new tenancies went to new residents. London remains a popular place to move to.

 

 

House Prices to Rise by Another 5% in 2015

Published On: July 21, 2015 at 6:02 pm

Author:

Categories: Finance News

Tags: ,,,

House prices could increase by almost 5% over the rest of the year, as property values are being driven by a shortage of homes on the market, according to an economic think tank.

The Centre for Economics and Business Research (Cebr) has tripled its property price predictions for 2015, from 1.5% to 4.7%.

The organisation says that a “chronic lack of properties being put up for sale” has pushed prices up in the last few months, which has caused this revision.

House Prices to Rise by Another 5% in 2015

House Prices to Rise by Another 5% in 2015

If its forecast is correct, the average UK home will be worth a record £249,000 at the end of 2015.

Cebr says that although the London housing market was a key factor in overall growth in 2014, it expects the capital to underperform the rest of the country this year, with prices predicted to increase by just 3.7%.

It says that despite the Conservative’s general election win removing the threat of a mansion tax, the prime London market has been affected by last year’s Stamp Duty reform.

As the amount of new homes being built is continuing to fall behind the level needed to keep pace with housing demand, Cebr predicts that house prices will rise by a further 3.4% in 2016 and 4.4% in 2017.

Cebr expects the average house price to be £307,600 by the end of the current Parliament in 2020. This would be a 23.6% increase.

It also says that although the Bank of England (BoE) is planning to increase interest rates at the end of this year, the cost of borrowing will rise gradually and settle at around 2%, still much lower than before the recession.

The combination of a lack of supply, earnings growth and low interest rates is expected to support house prices.

Cebr economist, Nina Skero, says: “With the possibility of higher taxation on prime property and intervention in the rental market less likely, the Conservative Party’s victory in the general election will likely support stronger price growth in the second half of 2015.

“Prices will also see a boost from the lack of fresh properties coming on the market.

“In London, average house prices are being weighed down by the prime end of the market. A strong pound, which makes London property less affordable for foreign buyers, and December’s decision to increase Stamp Duty on properties valued above £1.1m are both deterring some prospective buyers.”1

The current average house price is £270,702, according to Zoopla.

1 http://www.zoopla.co.uk/discover/property-news/house-prices-to-rise-by-5/?utm_content=bufferf7be6&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer#ETe7OswqaYgp7X3F.97