Posts with tag: first time buyers

Flats soar in value over the decade

Published On: September 23, 2015 at 3:56 pm

Tags: first time buyers,flats,property types

A new investigation has indicated that one particular property type has experienced a surge in demand during the last decade.

The study conducted by the Halifax showed that flats have risen in price more than any other property during the last ten years.

Not a flat rate

Since 2005, the average price of a flat has risen by 60%, or £730 per month, from £87,550 to £233,424. Over the same period, a terraced house rose in value by 41%, a semi-detached home by 32%, a bungalow by 28% and a detached property by 21%.[1]

The Halifax believes that the large rise in sales of flats is due to the market in London, where over half of all sales are for this particular property type. However, the spiralling cost of a flat is apparently making some first-time buyers turn their attention to other property types, which could suit them better in the long term, should they wish to start a family.

First-time options

Data from the report shows that semi-detached homes have increased in popularity amongst first-time buyers. This property type accounts for 28% of purchases in the first half of 2015, in comparison to 21% ten-years previously.[1]

On average, the average price of a semi-detached home is £370,000 but in the North and the Midlands, this price is under £120,000. ‘First-time buyers have switched to some extent away from flats-reflecting their large price increases-towards semi-detached homes over the last decade,’ noted Martin Ellis, housing economist at the Halifax.[1]

In London, the average price of a flat was found to be £370,281.[1]

Abstract home and key (done in 3d)

Regional differences

Flats were the best-performing property type over the last decade across the UK, but in London, Scotland and the South West of England, other property types came out on top.

Semi-detached were the most popular property types in the South East, East Anglia and the East Midlands. In Wales, terraced homes were the greatest performers, as well as in the North of England, the North West, Yorkshire and the Humber and the West Midlands.

All figures were taken from Halifax’s house price database.

[1] http://www.propertyflock.co.uk/f/EEB96B53D

Many househunters unaware of mortgage changes

Published On: September 22, 2015 at 4:51 pm

Author: Em Morley

Categories: Landlord News

Tags: first time buyers,house hunters,mortgages

Alarming new research has found that two thirds of potential house buyers in Britain are unaware of new mortgage rules, which were introduced last year.

An investigation by mortgage lender and broker Ocean Finance indicates that some 31% of people who are looking to buy a property in the next two years are unaware of the changes. Another 35% said that they were aware of the changes, but said that they felt confused by the new regulations.[1]

Changes

In April 2014, the largest piece of mortgage regulation in a decade came into force. The changes, brought into force by the Financial Conduct Authority, means that lenders have to take further steps to make sure borrowers can only get a mortgage that they can realistically afford.

These new rules mean that borrowers will face greater scrutiny from lenders on features such as their incomes and their expenditure. This includes spending on things like childcare, holidays and entertainment.

However, 70% of people questioned said they did not know that lenders are permitted to look more closely at their spending. As a result, 25% said they have not made changes to their habits in order to qualify for a mortgage.[1]

Of those that are aware of the changes, over a fifth have cut their spending on treats, alongside stopping contributing to life insurance and pensions to keep a larger proportion of their income in their bank accounts.

Only 24% of aspiring home buyers questioned were aware that the new legislations test their ability to afford a mortgage should interest rates rise. Just 16% knew that the rules would also test their resolve should there be a change to their personal circumstances.[1]

Clarification

In order to ensure they were up to speed on the new regulations, over one-fifth of would-be buyers have sought advice from an independent mortgage broker. 30% looked online for their information on the rules, with 14% relying on friends and family for advice. Cause for concern came with the news that over one-third of potential buyers have not sought any advice on applying for a mortgage.[1]

Many househunters unaware of mortgage changes

Further data from the research shows that another third of buyers are that concerned about the more hardline mortgage rules that they expect to have to delay purchasing a property in order to save for a larger deposit.

‘More than a year after the new mortgage rules were introduced, potential buyers are still in a state of confusion about what they mean in reality,’ said Gareth Shilton, spokesperson for Ocean Finance. ‘Even more worrying is that a large chunk of people who are gearing up to apply for a home loan are not even aware that the mortgage rules have changed,’ he continued.[1]

He feels that, ‘as an industry, we need to do more to educate buyers and to guide them through a process which many people are finding understandably daunting. For anyone who plans to apply for a mortgage in the next, it’s key that their finances are in order, including checking their credit file and gathering all their paperwork early to show as evidence.’[1]

‘They would also be wise to cut-back on non-essential spending such as takeaways and subscriptions, and to ensure that bills are paid on time so they demonstrate that they can consistently live within their means and stick to a budget,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-mortgage-change-research-2015092211009.html

FCA Says it’s Not Policy to Get Older People to Move Home

Published On: September 22, 2015 at 1:25 pm

Author: Em Morley

Categories: Landlord News

Tags: first time buyers,housing affordability crisis,housing crisis,last time buyers,older homeowners

The Financial Conduct Authority (FCA) has stated that it is not its policy to encourage older people to move home, after a member of its mortgages team said the UK has a “real issue with the last time buyer” at a recent conference.

Lynda Blackwell, from the City regulator, said that the Government’s focus on first time buyers might be misdirected.

She explained: “We’ve got a big supply issue in this country. There’s a lot of questions about whether it is right that the Government should focus on the first time buyer when we’ve got a real issue with the last time buyer.

“There’s older borrowers who basically pay off their mortgage and sit quite happily in a very big house.”¹

Her statement was made during a panel discussion on the housing shortage. It provoked a strong reaction from Saga, which described the comments as unhelpful and insulting.

FCA Says it’s Not Policy to Get Older People to Move Home

An FCA spokesperson said: “These comments, which were made as part of a panel discussion at a trade body event, do not represent FCA policy.

“Last week, we published a range of materials as part of a conference on the mortgage market organised by the FCA. That conference covered a wide range of issues concerning the mortgage market, including older homeowners.”¹

Director of Communications at Saga, which represents older people’s interests, Paul Green, responded to the remarks: “If people have saved and paid for their house over their working lives, it’s down to them if they want to fill it with family or live on their own, but setting the generations against each other or talking about ‘tackling older homeowners’ is not just unhelpful, it’s insulting.”

However, he did acknowledge that looking across the market could help first time buyers.

“First time buyer scheme for the young are a good start, but we need to consider incentives to help encourage those that would like to move, to take that step,” he said. “The FCA are right, we definitely need to do more and do it better, but using divisive language will only alienate the very people we need to help and encourage.”¹

Although the shortage of new homes is the main cause of the affordability crisis, which is pricing first time buyers out of the market, the lack of existing properties being put up for sale is also an issue.

Recent data from the Royal Institution of Chartered Surveyors (RICS) shows that the number of homes for sale is at a record low, contrasting to a rise in the amount of hopeful buyers.

At an event on the London rental sector, Christine Whitehead, Professor of Housing at the London School of Economics, said the ageing population is one of the key issues in the capital’s housing market.

“We are now housing four generations rather than three and we have not addressed that right across the board,” she stated. “The result is that those who have to get into the market are being excluded by people like me who live too long.”¹

Chief Economist at the Council of Mortgage Lenders (CML), Bob Pannell, says that the UK has “an ageing population that holds a disproportionately large amount of national housing assets.”

Statistics show that older people are more likely to under-occupy homes, but Pannell adds that they are also often “reluctant or unable to move to homes that might better suit their needs”².

He adds that encouraging more activity across the whole market could cause better use of existing properties and the marketability of new homes.

A CML spokesperson insists: “No one is suggesting that anyone should be forced to do anything they don’t want to do, however, there may be ways to remove the barriers that people who wish to move face.”¹

She says some homeowners who would like to move have found that after Stamp Duty and other costs, they would end up out of pocket by selling up.

Saga’s research reveals that two-thirds of older homeowners would consider moving house for retirement, but they are prevented by the lack of suitable properties or the cost.

¹http://www.theguardian.com/money/2015/sep/18/its-not-policy-to-get-older-people-to-move-house-says-fca

²http://www.cml.org.uk/news/when-building-more-homes-isnt-enough/

Right to Buy programme a success

Published On: September 22, 2015 at 10:02 am

Author: Em Morley

Categories: Landlord News

Tags: first time buyers,housing market,right to buy

New figures published by the Government indicate that the Right to Buy programme in Britain has created almost 40,000 new homeowners during the last three years.

Housing Minister Brandon Lewis said this total is more evidence of how Government initiatives aimed at assisting would-be homeowners are working. Mr Lewis noted that there have been 3,644 new starts and acquisitions since the Right to Buy scheme was revitalised in 2012.

Positivity

Lewis explained that this means the 3,054 homes sold in the first year of the scheme are already being replaced on a one-for-one basis.

‘For years, the discounts available under the Right to Buy were left to dwindle, denying thousands of people the opportunity to own their own home, ‘Lewis noted. He feels that, ‘this reinvigorated scheme has turned that around and means nearly 40,000 people have been able to buy the home they love, many of whom might otherwise never have had the chance to become homeowners. On top of that, it’s getting homes built, with councils replacing the additional homes sold on a one for one basis.’[1]

In addition, data shows that since the reinvigoration of the Right to Buy scheme, almost £964m in sales has been re-invested into the construction of new homes. A further £2.2bn is to be invested in the next three years. This means that in total, in excess of £3.2bn will be raised to invest in affordable housing building as a result of Right to Buy.[1]

Right to Buy programme a success

Success

In the three months to June this year, 2,779 households purchased property under the Right to Buy scheme. As a result, local authorities received £223m from these sales, 5% higher than the £212 in the same period during 2014.

Mr Lewis also pointed that since 2010 the Government has launched a range of measures to assist aspiring homeowners to purchase their own home. Overall, since the beginning of 2010, 232,000 households have been helped to take their first step onto the property ladder through the Help to Buy and Right to Buy schemes.

What’s more, the Government has promised to build 200,000 new starter homes, available to first-time buyers under the age of 40 at a 20% discount. Additionally, a new Help to Buy ISA will be introduced to assist a further number of would-be homeowners to save up for a deposit.

[1] http://www.propertywire.com/news/europe/uk-right-buy-programme-2015092111002.html

Property price rises at 13 year high

Published On: September 21, 2015 at 4:01 pm

Author: Em Morley

Categories: Landlord News

Tags: first time buyers,housing market,property prices

The price of property is showing no sign of slowing down, according to a new report conducted by Rightmove.

According to the online real estate portal, the value of properties coming onto the market during this month have risen by 0.9%, to take them to a new national high of £294,834.[1]

Record rise

An average property price rise of £2,550 is the biggest amount seen in September since 2002.

‘Prices are at an all-time high, yet borrowing is historically cheap and positive sentiment is aided by the ongoing postponement of rate rises from these six-year lows,’ noted Rightmove commercial director Miles Shipside. ‘Demand from those who can afford to buy remains high, and suitable supply remains tight, with the number of properties coming to market down 6% on the same period in 2014,’ he continued.[1]

Rightmove suggest that it is the average family-home market sectors that have seen the most growth during the month. In this section, all property types with three or more bedrooms went up by 1.2%. Contrastingly, first-time buyer type homes with two bedrooms or less dropped by 1.1%.[1]

Struggling

Shipside believes that, ‘some of those buying typical first-time buyer properties are now struggling to afford prices in this bracket that have on average gone up by nearly £10,000 in the last year, hence new sellers are asking for less.’[1]

Property price rises at 13 year high

However, those owning more expensive property assets are found to be benefiting most from the current market conditions. The top 15 most expensive counties have all seen price increases over the last month.

The average monthly increase is 1.8%, recorded in Surrey, Oxfordshire, Buckinghamshire and Berkshire. Bedfordshire saw the highest annual growth of 12.3%.[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2015/9/rightmove-says-biggest-september-asking-price-rise-for-13-years

Homeownership a dream for half of renters

Published On: September 18, 2015 at 9:15 am

Author: Em Morley

Categories: Landlord News

Tags: first time buyers,property market,renters

A depressing new report has revealed that over 45% of UK renters believe they will never be in a position to afford their own home.

The latest Post Office Money Mortgages survey found that of the 20 million people that are currently renting a property in Britain, nearly half expect to never get onto the property ladder.

Growing

What’s more, the average age that people now expect to take their first step onto the ladder is now 36, up one year on 2014. This expectation of having to wait until mid-thirties to own a property is shared across most would-be buyers, with those in the East Midlands most sceptical. In this region, people believe they will be 46 before they will be able to own their own property.[1]

Raising a deposit was found to be the largest barrier to potential property ownership, with UK renters believing that on average, it will take them eight and a half years to save enough. One in ten expect to have to wait for more than a decade.[1]

More cause for concern was shown with 28% of prospective home-buyers feeling that they will never be able to afford a deposit, unless their circumstances dramatically change. In addition, 17% cited that not being able to afford mortgage repayments is also a concern.[1]

Worrying

‘The average age at which non-homeowners expect to get a foot on the property ladder has increased to 36 over the past year, which is a worrying trend,’ said John Wilcock, head of mortgages at the Post Office. ‘It is clear that there is still a long way to go inspire confidence in the first-time buyers’ market, with nine million feeling they won’t ever be able to buy their own property. The size of a deposit is clearly the biggest hurdle that people face, with only 31% expecting to be able to raise the money alone,’ he added.[1]

Homeownership a dream for half of renters

In terms of raising a deposit, 31% of those looking to purchase a property said they would save the required amount alone. 25% said they would take advantage of the Government’s Help to Buy scheme, with 19% said they would rely on help from their partners. 13% said they would enlist the help of their parents.[1]

26% of respondents said they believe greater assistance for first-time buyers from the Government would be a help, with 24% saying lower interest rates would encourage them to buy in the near future. In addition, the re-introduction of no stamp duty for initial buyers would tempt 14% to buy.[6]

11% of respondents simply stated that they were happy with renting and the freedom that it brings, admitting they have no desire to own their own property.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/9/homeownership-a-distant-dream-for-nine-million-renters