Posts with tag: first time buyers

Tenants want their own Government minister

Published On: May 29, 2015 at 11:31 am

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A new survey has found that tenants would be in favour of appointing a Government Minister, who would be responsible solely for tenancy issues.

Majority

The latest First Time Buyer Opinion Barometer from Your Move and Reed Rains asked tenants whether they thought that there should be a Minister with specific responsibility for tenants. A majority of 60.2% were in favour of such a move, with just 14.9 stating that they thought it was a poor idea.[1]

Additional results showed that more people were resigned to renting for a longer period of time. Tenants were asked when they felt they would be able to get onto the property ladder, with just 11.2% replying that they felt this would be within the next 12 months. 13.1% of people asked went as far to say that they felt they would never be able to own their own home, up from 11% in April last year. [1]

Raising money for a deposit was found to be the main detractor from tenants getting their own home, with 70.8% replaying that this was the main reason for them continuing to rent [1]

‘Disproportionately disadvantaged’

Adrian Gill, director of Your Move and Reed Rains, commented that, ‘tenants feel that their particular circumstance deserves special representation at the heart of government.’ He feels that the, ‘younger generation have been disproportionately disadvantaged by the recession, with many stuck in lower paid roles, unable to progress their careers at the same pace as the previous generation.’[1]

Continuing, Gill said, ‘at the same time, savings rates have been stuck in the doldrums, meaning any money they have been able to put aside hasn’t been working hard for them. Saving for a deposit has become much more arduous. Rising prices have also pushed up the amount many need to save in the first place, adding insult to injury. This means many tenants trapped in rented homes during the recovery are still playing catch-up.’[1]

‘What will be interesting to monitor is whether such an initiative would cause a drastic change in the way we view renting in the UK. If the flexibility of renting, which most people see as a bonus, can be combined with the stability and reassurance that a Minister for Tenants could provide, it could create a golden formula that makes renting a better long-term, as well as short-term, option for many individuals and families.’[1]

Pipe-dream

Owning their own home remains the goal for the majority of tenants. However, economic strife is making this just a pipe-dream for many in the present climate. Unsurprisingly, when asked if they would want their own home if financial restrictions were not a factor, 93.4% of tenants responded positively.

When asked when they saw themselves moving into their own home, the responses from tenants were more widespread. Just 11.2% were confident of owning their own home before the end of the year, with 48% saying the expected the process to take at least five years. 27.5% said that they were unsure over any timeframes.[1]

Tenants want their own Government minister

Tenants want their own Government minister

The survey also found that more homeowners are looking further afield to ensure a first footing on the property ladder. 39.5% said that they would move over 10 miles from their workplace in order to become home-owners.[1]

Gill commented that, ‘Vast numbers of tenants possess the will to own their first home, but not yet the means.’

‘For many, homeownership is more of an aspiration than a concrete objective. Yet it may not be as difficult a dream to realise as many believe. Yes, rising house prices – and this month is no different in that sense – mean that the requisite mortgage becomes bigger, pushing up the amount of deposit a first-time buyer needs to put down. Yet there are a number of government schemes in place to ameliorate that problem, both Help-to-Buy schemes to start with. The uptake of these has been relatively low, suggesting that if tenants got more clued-up about the help available, that aspiration would be more likely to become an attainment.’ [1]

First-time encouragement

Encouragingly, statistics reveal that there were 25,600 first-time buyer completions during April 2015. This was 11.3% higher than in March and 33.3% up on the final quarter of last year. Furthermore, the average property price of first-time buyer properties was up 10.6% on twelve months ago.[1]

Gill concluded by saying, ‘April has seen the market continuing to fire on all cylinders, with all indicators showing strong growth. Predictions about a slow-down, or even sudden halt, to completed transactions due to lack of housing appropriate for first-time buyers have proven premature for now. However, the inexorable rise of first-time buyer house prices does suggest that the demand for such properties is still outstripping supply and the Government’s reticence to fully overhaul the planning system will not alleviate that crush.”

 

 

[1] http://www.propertyreporter.co.uk/property/tenants-demand-their-own-government-minister.html

 

Lewisham Helps Renters get on the Property Ladder

Published On: May 21, 2015 at 12:55 pm

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Raising the substantial deposits required for buying a home is a well-known problem for first time buyers. Without help from their parents, it is virtually impossible to get on the property ladder.

In the capital, it is an even bigger difficulty, with an average of £69,000 needed for securing a house, found Savills estate agent. However, one South East London suburb is helping those struggling.

Housing association L&Q has launched a scheme, Goldcrest House, on Lee High Road, Lewisham. Aspiring buyers can rent a one or two-bedroom flat at a subsidised rate; 20% less than commercially rented new builds in the area.

This will hopefully give tenants the chance to save for a deposit.

Under the scheme, titled UpToYou, renters can stay in the home for as long as they want and can then move to another rental property or buy themselves a home, either shared-ownership or outright, in the future.

L&Q is offering 29 properties, some overlooking the River Quaggy and the majority with balconies or terraces. They will be ready to move into next month.

Prices start at £930 per month, or £1,150 for a two-bedroom flat. Priority will be given to those already living in Lewisham.

The nearest station is Lewisham, which is a five-minute walk from Goldcrest House. Trains to Cannon Street or Charing Cross take about 15 minutes. To Canary Wharf, locals can take the Docklands Light Railway. An annual season ticket is £1,284.

The scheme sounds too good to be true, and to some Londoners, it will be. Rents at Goldcrest House have been set in line with new builds in Lee; better bargains could be found in older homes.

The area is also a redevelopment zone. The Leegate Shopping Centre has been named the worst in Britain, with over a third of shops empty. Lewisham Shopping Centre, however, is bustling, but lacks any independent shops.

Work has also begun on a six-year regeneration project in the town centre, meaning that traffic is awful and the area doesn’t look great.

There are some quality pubs and restaurants here, but not many. Locals usually prefer Blackheath or Hither Green for a night out.

L&Q’s sales negotiator for the scheme, Roxanne Halliday, has lived in the area and says that Goldcrest House is ideal because it is close to open space, transport and shopping.

She says: “The traffic problems will end when the regeneration is finished. You can get lots of ethnic foods and it is very diverse and friendly.”1 

1 http://www.homesandproperty.co.uk/property-news/affordable/first-time-buyers-lewishams-low-rent-route-getting-property-ladder

House Prices Rise 10% in a Year

Published On: May 20, 2015 at 11:09 am

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House prices soared by 9.6% in the year to March 2015, up from 7.4% in the previous month, the Office for National Statistics (ONS) revealed.

This is the first time the annual growth figure has risen since last summer. From September 2014, yearly property price inflation decreased slowly every month, from a record high of 12.1%.

However, the most recent increase was not caused by the spiralling London housing market as it was last summer. This year, Scotland experienced the fastest price rises of 14.6% in March.

The East of England was second at 11.4%, and then the South East and London with 11.2% growth.

Not including London and the South East, UK property prices rose by 8.1% in the year to March 2015; much higher than usual growth, indicating that values are strengthening around the country.

This increase made the average house price £273,000 in March, found the ONS data. This is £4,000 higher than February and only £1,000 off the sky-high value recorded

House Prices Rise 10% in a Year

House Prices Rise 10% in a Year

in August 2014.

Annual property price growth was 9.4% in England, 5.7% in Wales and 7.5% in Northern Ireland. Scotland’s huge 14.6% increase was the highest yearly rise north of the border since July 2007.

The boom in March has caused some regions of the country to witness record high house prices, including the East of England, East Midlands, West Midlands, South East and South West.

London’s values are still slightly less than the prices seen in August 2014.

But now that the general election is over, prices could be pushed up higher in the next few months. The ONS index is a month behind other studies.

Managing Director of online estate agent House Tree, Tom Harrington, says: “The ONS data is pretty historic, as the housing landscape has changed dramatically since March.

“Now that the general election is out of the way, and all the uncertainty surrounding it, which saw buyers and sellers alike sit on their hands, the handbrake has been released on activity and confidence.”1

Chief of online estate agent House Simple, Alex Gosling, says: “Buyer interest has picked up noticeably in the past week. We will have to wait and see if this is just a slingshot effect of the general election. The issue over the past few months has never really been about demand, because the buyers have always been there.”1 

The Halifax’s latest monthly property index revealed the average house price is now a record £196,412, up £3,084 compared to March this year, when prices had risen by a slower monthly rate of 0.6%.

Annually, prices were up 8.5% in the three months to April, compared with 8.1% growth in the three months to March.

A separate study by the Council of Mortgage Lenders (CML) indicates that in the first quarter (Q1) of 2015, first time buyers took out 61,300 mortgage loans, a decrease of 24% from Q4 2014 and 11% down on Q1 2014.

Those moving home took out 70,400 loans, a 25% drop on Q4 2014 and a fall of 11% yearly.

Chief of mortgage broker SPF Private Clients, Mark Harris, says: “Mortgage lending got off to a slow start this year, but started to pick up by March and with the uncertainty created by the election now resolved, we expect that trend to continue.”1

The ONS found that in March, first time buyers paid 7.8% more for their property than a year previously. This rose by 10.3% for existing homeowners.

1 http://www.dailymail.co.uk/money/mortgageshome/article-3087544/Annual-house-price-inflation-rises-time-summer-average-home-adding-4k-month.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

 

 

 

Homebuyers Don’t Know Enough About the Legal Process

Published On: May 19, 2015 at 2:55 pm

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Homebuyers do not know enough about the legal process, a new study has found, with around three quarters confused about what is involved.

77% of those planning to buy a property in the next ten years said they do not know when they are expected to pay the deposit and 38% are unaware of the difference between a freehold and leasehold.

Homebuyers Don't Know Enough About the Legal Process

Homebuyers Don’t Know Enough About the Legal Process

Over half of the 2,000 Britons surveyed could not define gazumping and 45% are not sure what a conveyancer does, revealed the research by property law specialist Slater and Gordon.

Samantha Blackburn, a property lawyer, says: “Tens of thousands of Brits will be contemplating buyers or selling a home as the weather and the market warm up. It’s vital that buyers, especially first time buyers, know their rights and have a basic understanding of the legal process.

“Buying a home can be confusing, time consuming and expensive. Misunderstanding the process and not getting the correct legal advice cannot only delay a sale, it can also lead to increased costs and potential issues in the future.”1 

One of the main areas of confusion was the rights of leaseholders, with 32% of respondents unaware that they must pay ground rent to the freeholder.

Here are some of the terms to remember:

Conveyancer: A legal expert, usually a solicitor, who organises all aspects of the sale.

Exchange: When the buyer and seller sign contracts and send them to one another. The deposit is lodged and the sale is now legally binding.

Completion: The money is transferred and the keys are given to the buyer.

Freehold: The property is owned outright.

Leasehold: The home is owned for a set period when it is on lease from the freeholder.

Gazumping: When the owner has agreed to sell, but then accepts a higher offer.

Gazundering: When the buyer offers less at the last moment.

1 Binns, D. (2015) ‘Gazumped? Homebuyers clueless over legal process’, Metro, 19 May, p.24

Help to Buy 2 is Falling Short of Expectations

Published On: May 19, 2015 at 8:42 am

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Better use of Help to Buy 2 could back a further 200,000 first time buyers and rebuild this market to pre-recession growth, found mortgage insurer Genworth.

The Government’s scheme was initially designed to enable up to £130 billion of lending over three years; £43.33 billion per year. However, Genworth’s research found that Help to Buy 2 supported just £5.76 billion of mortgage lending in 2014, only 13% of its potential.

The analysis of industry, Government and regulatory data reveals that last year’s lending left a shortfall or spare capacity of £37.57 billion.

Pre-recession health

This spare capacity could bring first time buyer figures back to the pre-recession standard. The average Help to Buy 2 loan in 2014 was £147,378, meaning that the extra £37.57 billion of lending could help 255,415 more buyers. First time buyers make up 78% of all Help to Buy 2 consumers, so the spare capacity could see 199,224 extra buyers entering the property market.

Currently, first time buyer activity is much lower than the long-term average. Using a mortgage, 311,400 first time buyers bought a home last year; around 30,000 used Help to Buy 2. This compared to more than 500,000 a year from the mid-1980s to early 2000s. If Help to Buy 2 was more effective, it could create a further 200,000 buyers and return numbers to a healthy level.

Vice President for Mortgage Insurance at Genworth, Simon Crone, says: “At a time when hopeful first time buyers face multiple challenges to reach their goal of homeownership, it seems unacceptable that Help to Buy is not maximising its capabilities to help more achieve this aim.

Help to Buy 2 is Falling Short of Expectations

Help to Buy 2 is Falling Short of Expectations

“Given low rates of house building, it is perhaps a blessing that the market has not been flooded by an extra 200,000 first time buyers overnight. But if careful steps are taken and it is paired with greater house building to guard against house price inflation, our analysis shows that Help to Buy could help restore the first time buyer market to its former glory.

“Yet a major challenge remains; the current scheme holds little appeal to building societies and is being overlooked by banks at 85% and 90% loan-to-value [LTV] where loans are going unprotected.

“If the Government is serious about supporting homeownership in the UK, it must work with the private insurance sector to bed a permanent mortgage guarantee into the market for the long haul, with terms that are more appealing to lenders to encourage wider uptake.”

High LTV lending

Genworth’s study also found that mortgage lending to buyers with small deposits became reliant on Help to Buy 2 during 2014.

The amount of total >90-95% LTV lending accounted for by Help to Buy 2 consistently rose during the year. In Q1, Help to Buy 2 lending made up 63% of all >90-95% lending, increasing to 76% in Q2, 79% in Q3 and 81% in Q4, a record high.

As the high LTV market experienced a substantial slowdown in Q4 2014 and the mortgage market brought in stronger lending criteria, Help to Buy 2 was essential for avoiding levels dropping back to those seen in the recession.

Help to Buy 2 lending grew almost twice as fast as >90-95% LTV activity from Q1 to Q2, 78% compared to 48%. It grew twice as fast from Q2 to Q3, 8% compared to 4% following the Mortgage Market Review.

With new Financial Policy Committee (FPC) controls and stricter capital requirements for lenders, Help to Buy 2 and overall >90-95% lending steadied in Q4 2014, falling 18% (£318m) and 21% (£460m) correspondingly.

Although Help to Buy 2 has tighter limits than the wider market, Genworth’s findings indicate that the Government scheme is becoming a crucial tool in supporting 95% LTV lending.

Crone adds: “There is substantial evidence to suggest Help to Buy 2 has become increasingly vital in propping up the market for 5% loans which are the lifeblood of first time buyers. Macro prudential action is important to maintain vital stability in the economy, but there are signs that it is pulling in the opposite direction of the Government’s efforts to support first time buyers with smaller deposits.

“It leaves a big question mark over how access to high LTV loans would survive in a climate of tighter lending restrictions when Help to Buy 2 is withdrawn in a little over 18 months’ time. There is little in the data to inspire confidence that 95% LTV mortgages can survive and prosper without some form of support in place.”

He concludes: “Politicians would be naïve to contemplate a bright future for first time buyers without a permanent scheme that incentivises lending while keeping a close eye on affordability measures.

“The new Government must commit to a review of Help to Buy 2 that looks to learn lessons from the experience so far and puts permanent measures in place to prevent the high LTV market falling further back into decline.”1

1 http://www.propertyreporter.co.uk/finance/is-help-to-buy-2-underachieving.html

65% of First Time Buyers Must Wait to get on Property Ladder

Published On: May 18, 2015 at 12:50 pm

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Clydesdale and Yorkshire Banks have conducted research that found most first time buyers have to wait longer than planned to get onto the property ladder.

65% of First Time Buyers Must Wait to get on Property Ladder

65% of First Time Buyers Must Wait to get on Property Ladder

The Annual First Time Buyers (FTB) Survey revealed that nearly two thirds, 65%, had to wait longer than expected to move into their first home, with just 8% becoming homeowners earlier than planned.

However, these figures indicate a slight improvement on the previous year, when 68% could not get on the property ladder quickly. The largest proportion (17%) of those who have to wait are delayed between one and two years.

The struggle to break into the housing market means that most new homeowners stay in their first house for a while. The greatest proportion (21%) plan to stay in their first property for between four and five years. 19% do not plan to move for nine to ten years.

In the Midlands and North East, the highest percentage plan to stay for between nine and ten years, in contrast to those in London, the South West and Wales, who hope to stay for between three and four years.

Director of Retail Banking, Steve Fletcher, says: “Clydesdale and Yorkshire Banks have extensive experience of helping first time buyers get onto the property ladder and we know how difficult it can be to buy your first home.

“It is positive that our research shows that there is a small improvement on the previous year, however, almost two thirds of first time buyers still face challenges in meeting their own timescales for being a homeowner.

“We remain focused on supporting first time buyers and helping to make their dream of owning a home a reality. Whether it is saving a deposit or finding the right mortgage to suit individual needs and circumstances, Clydesdale and Yorkshire Banks can help throughout the process of becoming a homeowner for the first time.”1

1 http://www.propertyreporter.co.uk/property/65-of-ftbs-are-waiting-longer-than-expected-to-get-on-the-ladder.html