Posts with tag: first time buyers

Shortage of Conveyancers Putting Property Sales on Hold

Published On: February 23, 2016 at 9:32 am

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A lack of conveyancers is holding up a large number of property sales, according to recent research.

The CEO of estate agent haart, Paul Smith, notes that as a result, the amount of exchanges dropped by 14.7% in January compared to the previous month and by 7.5% compared with January last year.

Based on his own company’s data, Smith estimates that there were 50,152 exchanges in January, with an average house price of £225,914.

He reports that demand has grown by over a third year-on-year, while housing supply has increased by 8%.

Shortage of Conveyancers Putting Property Sales on Hold

Shortage of Conveyancers Putting Property Sales on Hold

Part of the surge in demand may have come from a rush of buy-to-let landlords hoping to complete on a property investment ahead of the 1st April Stamp Duty deadline.

Smith comments: “The property market in the New Year has got off to a flying start with a surge in buyer registrations and new property instructions.

“The number of new homes coming on the market is up by a healthy 8% compared to a year ago, but demand has surged by 35% over the same time period, with buy-to-let investors responsible for a large proportion of this rise in anticipation of the Stamp Duty surcharge.”

He continues: “This high level of activity has resulted in a substantial backlog of homes in the pre-completion stages, and we’re now seeing a shortage of conveyancers and lawyers to progress these sales, leading to delays and a subsequent decline in the number of completions in January.

“Across the UK, we’re now seeing more than 15 buyers chasing every property to come onto the market, and house prices have subsequently risen by 10% annually.”

How does the whole UK property market compare to London?

“London is also seeing a high level of activity and finally the issues surrounding the supply of homes is starting to ease, with a 20% increase in instructions registered compared to last year,” Smith reveals.

“In fact, supply is now beginning to outpace demand, which is up by 14% over the same time period. While this increase is very welcome, we are still seeing nearly 21 buyers for every instruction, despite the slowdown at the top end of the market.”

And how are first time buyers faring?

Smith explains: “First time buyers have started the year enthusiastically, with demand for starter homes up 26% annually. This is just the start of an upward trajectory for first time buyers, as the 3% Stamp Duty surcharge for buy-to-let investors, due to be introduced in April, will mean less competition for homes.”1

From 1st April, buy-to-let landlords and second homebuyers will be charged an extra 3% Stamp Duty on properties costing £40,000 and over. Many investors have been rushing to purchase rental properties ahead of the additional tax charge.

Tax specialists have warned about the high cost of missing the deadline.

For the latest landlord information and advice, check back to LandlordNews.co.uk.

1 http://www.propertyindustryeye.com/lack-of-conveyancers-holding-up-huge-numbers-of-house-sales/

Just 16 Areas are Affordable for Single First Time Buyers

Published On: February 20, 2016 at 3:48 pm

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There are only 16 areas in England and Wales that are affordable for single first time buyers on an average income.

Generation rent is well aware of the sky-high deposits required for getting onto the property ladder, while house prices continue soaring.

Having to save these huge deposits is making it increasingly difficult for couples to buy their first home, meaning that those on a single salary are facing even more hurdles.

Recent research by Savills found that there are now just 16 council districts in England and Wales, out of a total of 348, where a single buyer earning an average salary is able to buy a moderately priced property.

Where can a single first time buyer purchase a home?

Position

 District Region Income needed for single buyer Income needed for two buyers Average house price

Average salary
1 Blaenau Gwent Wales £13,333 £8,571 £75,000 £19,400
2 Burnley North West £15,022 £9,657 £84,500 £20,184
3 Merthyr Tydfil Wales £15,822 £10,171 £89,000 £19,930
4 Hyndburn North West £15,991 £10,280 £89,950 £19,660
5 Pendle North West £16,356 £10,514 £92,000 £21,180
6 Stoke-on-Trent West Midlands £17,067 £10,971 £96,000 £19,236
7 Rhondda Cynon Taf Wales £17,244 £11,086 £97,000 £20,788
8 Kingston upon Hull Yorkshire and the Humber £17,511 £11,257 £98,500 £17,796
9 Blackburn with Darwen North West £17,778 £11,429 £100,000 £18,345
10 Neath Port Talbot Wales £18,667 £12,000 £105,000 £20,412
11 County Durham North East £19,556 £12,571 £110,000 £21,468
12 Barnsley North West £20,000 £12,857 £112,500 £20,396
13 Copeland North West £20,978 £13,486 £118,000 £29,190
14 Liverpool North West £20,978 £13,486 £118,000 £21,184
15 Wigan North West £21,333 £13,714 £120,000 £21,788
16 North Lincolnshire Yorkshire and the Humber £21,867 £14,057 £123,000 £22,835

Unsurprisingly, Savills’ study found that single buyers are priced out of Greater London, the East of England and the South East, where house prices are continuing to soar.

Just 16 Areas are Affordable for Single First Time Buyers

Just 16 Areas are Affordable for Single First Time Buyers

The 16 most affordable regions are either in the North West, North East, Yorkshire and the Humber or the West Midlands in England or in Wales.

And Savills believes that now is a good time to purchase. The Head of Residential Research, Lucian Cook, explains: “While our five-year mainstream house price forecasts for the North East, North West and Wales are lower than the UK average, all areas are expected to experience positive growth to 2020, ranging from 12% in the North East to 14.8% in Wales.”1 

Blaenau Gwent in south Wales is the cheapest place to purchase a home, with an average price of £75,000. To afford a typical two or three-bedroom terraced house in this area, a single buyer would need to earn just over £13,000 per year. As the average salary in Blaenau Gwent exceeds this by £6,000, it is considered the most affordable place for single first time buyers to get onto the property ladder.

The highest average house price of the 16 locations is in North Lincolnshire, at £123,000. Buyers here must earn close to the average annual wage of £23,000 to qualify for a mortgage.

Liverpool is the most expensive of the areas for single buyers, as they will need an income of £20,978 a year to buy a £118,000 home.

Lenders are more likely to consider couples on two salaries, as they are considered lower risk buyers. Purchasing as a pair almost halves the amount each person needs to earn a year, taking the required salaries to just £8,571 in Blaenau Gwent and rising to a maximum of £14,057 in North Lincolnshire.

The individual incomes needed by a couple are not exactly half of the amount needed for a single buyer, as the loan-to-income ratios for single and dual earners are different – usually three-and-a-half times the income for dual earners and four-and-a-half times for single workers.

1 http://www.homesandproperty.co.uk/property-news/buying/uk-house-prices-the-most-affordable-areas-for-single-buyers-in-england-and-wales-a99016.html

First Time Buyer Mortgages Outnumber Buy-to-Let Loans by Three to One

Published On: February 17, 2016 at 9:26 am

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Despite an increase in buy-to-let lending last year, first time buyer mortgages outnumbered landlord loans by three to one, according to data from the Council of Mortgage Lenders (CML).

First Time Buyer Mortgages Outnumber Buy-to-Let Loans by Three to One

First Time Buyer Mortgages Outnumber Buy-to-Let Loans by Three to One

In 2015, 311,700 mortgages were approved for first time buyers. Although this figure is the same as 2014’s number, the amount borrowed, £46.7 billion, was the highest since 2007.

Home movers took out 365,800 mortgages for house purchase, down slightly on 2014 (0.2%). However, the amount was up, at £72.1 billion – again, the highest since 2007.

Buy-to-let mortgages increased by both volume, by 28%, and by value, up 39%, which was also the highest recorded since 2007.

Just 41% of buy-to-let loans were for house purchase, amounting to £15.6 billion.

The Managing Director of Paragon Mortgages, John Heron, comments on the data: “A common accusation levelled at buy-to-let landlords is that they have an unfair advantage over homebuyers.

“The data would suggest this is not the case, with buy-to-let purchases making up only 11.6% of all purchases.

“First time buyers accounted for three times as many transactions as buy-to-let purchasers.”1

While this may sound like good news for generation rent, since the start of this year, buy-to-let landlords have been flooding into the property market in a bid to beat the 1st April deadline for an increase in Stamp Duty. The figures for the first half of 2016 are likely to be very different.

Separate data from the Office for National Statistics (ONS) found that the average house prices across the UK ended last year at £301,000 in England, £175,000 in Wales, £193,000 in Scotland and £148,000 in Northern Ireland.

The highest average property price in England was unsurprisingly in London, at £536,000, and the lowest was in the North East, at £155,000.

The ONS reports that annual house price inflation was 7.3% in England in 2015, 1% in Wales, -0.2% in Scotland and 1.5% in Northern Ireland.

1 http://www.mortgageintroducer.com/cml-data-proves-buy-to-let-isnt-out-of-hand/#.VsQ7o1tLH8s

Two-thirds of tenants saving for own property

Published On: February 12, 2016 at 11:28 am

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An interesting new report suggests that over two-thirds of tenants are saving for a deposit and are willing to move away from family and friends to get onto the property ladder.

A study conducted by PropertyLetByUs.com, one of the leading online letting agents, also shows that just under a third of tenants have given up on owning their own home.

Moving

46% of tenants said that they would only be able to afford a property if they were to move to a cheaper area. One in six said that they would consider a lodger to help them with their mortgage costs.

When asked how long they thought it would take to purchase a property, one third said within the next two years. Almost 20% said that they would be able to afford a home in the next three years, with 4% thinking it would take five years.

Over half of tenants aspire to move up the rental ladder before buying their own home, with 51% stating their intent to move to a nicer property when they can.

Two-thirds of tenants saving for own property

Two-thirds of tenants saving for own property

Saving

Jane Morris, Managing Director of PropertyLetByUs.com, noted, ‘despite the recent media attention on Generation Rent, our research shows that the majority of tenants are actively saving for a deposit and are looking to buy a property in the next five years.’[1]

‘Savvy tenants recognise that they may have to look further afield for properties they can afford. Many are prepared to move to areas that are some distance from their friends and families,’ Morris continued.[1]

Morris went on to point out, ‘the latest stats how that a growing number of young people are renting for longer. According to PwC, almost 60% of 20-39 year-olds in England will rent their homes by 2025, while just 26% will have got on the housing ladder. This younger age group will find it increasingly difficult to buy and are likely to be older than previous generations, before they can afford their own home.’[1]

Concluding, Morris said, ‘what is clear is that the majority of tenants still aspire to purchasing a property. But many tenants recognise that they will have to make sacrifices and compromise, so they can afford to buy a home of their own.’[1]

[1] http://www.propertyreporter.co.uk/landlords/majority-of-tenants-saving-for-first-home.html

First Time Buyers Spend £50k on Rent Before Buying a House

Published On: February 12, 2016 at 9:44 am

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The average first time buyer purchasing a home this year will have already spent £52,900 on rent by the time they get onto the property ladder, according to the Cost of Renting report from the Association of Residential Letting Agents (ARLA).

The report, compiled with the Centre for Economics and Business Research (Cebr), reveals that the average first time buyer in England in 2016 will have spent 16.4% of their total lifetime earnings on rent for all the years they were a private tenant. It is expected that future first time buyers will spend 22% more than those buying today.

First Time Buyers Spend £50k on Rent Before Buying a House

First Time Buyers Spend £50k on Rent Before Buying a House

First time buyers purchasing this year in the North East will have spent £31,000 on rent – the lowest in England. Contrastingly, those in London will have spent double that, at £68,300.

The South East is the only region other than London where the total spent on rent is above the average, at £55,900.

In 2015 alone, the average tenant in the UK spent 22% of their wages on rent, rising to 30% in the capital. Those in the East of England enjoyed the most affordable rents, due to relatively high earnings in the region. However, rent still ate up 18.9% of their disposable income.

Britons that move out of their family home at the age of 18 will typically rent for 13 years before they buy their own property.

ARLA’s Cost of Renting report revealed that those leaving home and starting to rent this year will spend an average of £64,400 on housing before they can buy their first home – one fifth (22%) higher than the current first time buyer.

Those leaving home and renting privately in London will continue to be worse off, spending an average of £91,500 on rent before they buy a property – £23,100 more than those buying in the capital this year.

The Managing Director of ARLA, David Cox, comments on the findings: “The rising cost of rent in this country is a huge issue, and is preventing tenants from being able to save to buy a home. Our Cost of Renting report reveals that tenants are already spending a significant proportion of their income on rent, and therefore struggling to save any money.

“However, as house price affordability worsens and interest rates start rising, more pressure will be put on renting, with weekly rent likely to rise, so homeownership will remain out of reach for many.”

He continues: “Rents are becoming alarmingly unaffordable due to the lack of available housing; the north-south divide we’re currently seeing in the UK is a clear illustration of this. The London rental market is competitive, with far more prospective tenants looking for properties than actual houses available. This is pushing up rents in the capital, which will continue to put pressure on surrounding areas, including the South East, as Londoners relocate to avoid high rent costs.”1

1 https://www.landlordtoday.co.uk/breaking-news/2016/2/lifetime-cost-of-rent-exceeds-50-000

Even Conservative MPs Cannot Afford a Home

Published On: February 11, 2016 at 3:30 pm

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A Conservative MP has spoken out about his struggles to buy a home after admitting to moving back in with his parents.

William Wragg, 28, earns £74,000 per year plus expenses as the MP for Hazel Grove. He is also entitled to House of Commons expenses to cover the cost of renting a second home in London, as well as office space.

Although he is, admittedly, “paid extremely well”, Wragg has been forced to move back in with his parents in the North West in order to save for a deposit.

Wragg earns over two and a half times the average national salary.

He explains his situation: “I am part of that boomerang generation. In a few years, hopefully I will have saved up enough for a deposit. I know exactly what it is like. I have complete empathy with people in that position.”1 

Many aspiring homebuyers are taking proactive steps to finally getting on the property ladder. Recently, we reported that since its launch on 1st December 2015, a Help to Buy ISA has been opened every 30 seconds by those needing some extra help in saving for the huge deposits required.

Additionally, we announced yesterday that a whopping 15,000 Londoners are looking to use the Help to Buy London scheme to help with purchasing a property. This level is unsurprising, with London’s average house price now £506,724.

The housing spokesperson for Labour, John Healey, comments on Wragg’s circumstances: “He is part of a generation for whom homeownership is in freefall. This is a generation of people who are often on good middle incomes but who still find the dream of homeownership is out of reach.

“A million more people became homeowners under Labour, but since 2010, the numbers have fallen by 200,000.”1 

It appears that more buyers are managing to get a foot on the ladder, however, as Marsh & Parsons reports a surge in first time buyer sales, up from 49% of all sales in December to 66% in January.

1 http://i100.independent.co.uk/article/even-74kyear-tory-mps-are-having-to-move-back-in-with-parents-to-save-up-for-a-house–WyM3qpeR6x?utm_source=indy&utm_medium=top5&utm_campaign=i100