Posts with tag: housing market

How will COVID-19 change the housing market? Seven predictions from property lawyers Collyer Bristow

Published On: May 18, 2020 at 8:11 am


Categories: Property News

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The housing market has been hit hard by COVID-19 and will take some time to recover. But research from Collyer Bristow published earlier this year reports homeownership remains the number one goal for 81% of 18 to 44-year olds.

Janet Armstrong-Fox, Partner and Head of Private Client Property at Collyer Bristow, has made the following predictions about how the future state of the UK housing market:

1. A renewed interest in rural properties 

At the start of the coronavirus lockdown, those with second homes in the countryside were quick to quit our cities looking for the space and greater freedom the countryside has to offer.

It is likely that as restrictions lift the demand for rural boltholes will reach near fever-pitch with families, particularly those with younger children, looking to make the move from our cities to the countryside.

The demand for large country houses is likely to be strong with prices rising due to limited supply, with even more modest country homes being highly desirable. Rural properties with paddocks or a field will be particularly desirable as they can attract a mixed-use stamp duty saving.

And for those not able to move to the countryside, the demand for homes with good sized gardens will increasingly attract a premium.

2. The rise of the home office 

Residential developers are an innovative bunch and quick to change their products to meet buyers’ demands.

Agile working, or working from home, has been on the increase over the past decade and has now, through necessity, proven to work well. And whilst some will be missing life in the office, we believe many people will continue to choose to work from home for at least part of the working week.

The kitchen table or spare bedroom may work as a temporary solution, but as home working increasingly becomes the norm, residential developers are likely to respond and incorporate dedicated working from home spaces in new homes with the required digital connectivity.

3. Renewed and persistent calls for high-speed broadband

The Collyer Bristow Home Ownership Attitudes and Aspirations report has for the past two years shown the importance of digital connectivity with new home buyers.

The coronavirus lockdown has, however, highlighted digital ‘not spots’ across the country and we expect the calls for nationwide high-speed broadband to become louder and more persistent, with government ministers being urged to consider increasing the £5bn announced in the Budget to upgrade rural broadband.

Digital connectivity is no longer a nice to have, but an essential service. Homes that do not have good connectivity are likely to be harder to sell with owners having to accept potential price reductions.

4. New homes will drive the property market over the next six months 

The sale of new homes will be the primary driver behind the housing market recovery, at least in the short term. New homes are often purchased off-plan with no need for physical viewing.

Off-plan buyers also look to completion dates many months into the future when the property is physically completed. And new homes are often released in much-anticipated phases, with buyers knowing well in advance that they want to live on a particular development.

5. Overseas buyers driving demand

Interest in new build UK property from overseas buyers, particularly from the Middle East and Asia, remains strong. And whilst overseas investors have, perhaps unfairly, been criticised in the past, their cash injection into the UK economy will now be welcomed, supporting jobs in the construction industry and providing much-needed tax revenues. 

6. Opportunities for prime residential market buyers 

The prime residential market has been in the doldrums for the past few years, with buyers in short supply. But now, the prime residential market in London represents good value for cash buyers. Agents report increased online viewings and there is talk of good deals to be done.

7. And finally, good news for architects

Architects are often cited as the bellwether of the property market – the first to feel the pain and the first to see recovery.

But residential architects can, we believe, expect to see high demand for their services from homeowners unwilling or unable to move looking to expand or reconfigure homes to give growing families more space and to incorporate dedicated home working spaces.

Government introduces new regulations to kick-start housing market

New regulations have been introduced by the government to allow buyers and renters to view properties and move homes. 

Estate agents can now open, viewings can be carried out, and removal firms and conveyancers can restart operations.

David Cox, Chief Executive of ARLA Propertymark and Mark Hayward, Chief Executive of NAEA Propertymark comment: “It’s great news for consumers and the industry that the housing market is being opened up and people can let, rent, buy and sell properties again. The new regulations provide clarity to agents and will allow them to deal with pent up demand from consumers. 

“It’s also a step to reinvigorating the housing market and will be a boost to the economy. Safety, of course, will be paramount, and we would encourage everyone to ensure that they follow Government guidelines closely to protect others and themselves.”

Andy Marshall, Chief Commercial Officer, Zoopla, said: “We’re delighted that the Government has recognised the need to restart the property market, permitting estate agents to operate – within the parameters of common sense social distancing. Now is the time to get the market moving and to restore it to full health.

“With 373,000 transactions held up in the pipeline, amounting to £82bn in property value and £1bn of agent revenue, the Government’s move is set to be a catalyst for the broader economy. The multiplier effect of estate agency will stimulate cashflow for a network of industries, from removal firms to decorators to solicitors, benefiting the economy at both a local and national level.

Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA), said: “Tenants will now be able to look for a new home and move into it whilst those landlords who have unexpectedly faced empty properties will be able to put them back on the market.

“It is vital though that all viewings and house moves take place safely and in line with the Government’s guidance. We will continue to work with the Government, landlords and others to ensure that the risks of spreading coronavirus are minimised.”

new regulations to kick-start housing market
Government introduces new regulations to kick-start housing market

Steve Olejnik, managing director of Mortgages for Business, said: “We can’t know exactly what’s going to happen to the market, but we expect a temporary, short-term fall across London and the southeast in the region of about 15%. 

“But there’s no question that if you invest in bricks and mortar now, with a bit of haggling during the process, you are going to see a lot of long-term capital growth. 

“I think values will be back at February 2020 levels by the spring or summer of next year. Landlords who have not asked for a repayment holiday will be well set to snap-up some bargains with the help of lenders who have demonstrated a willingness to lend since the third or fourth week of the pandemic.

“Yields from the various types of property remained pretty steady throughout 2019 and suggest property will offer a better return than many other investments in the future – especially to smart, professional landlords looking outside the box at HMO investments.”

Grant Lipton, co-founder of London-focused developer Great Marlborough Estates, has commented: “The housing market re-starting is obviously positive news, but it will need more than a press release to give buyers and sellers confidence and so the government needs to look at a range of measures to kick-start activity including a Stamp Duty holiday.”

Mary-Anne Bowring, managing director at Ringley Group, comments: “There’s no reason buyers or renters shouldn’t be able to move home if they are able to do so safely in accordance with social distancing guidelines so today’s announcement is welcome news.

“However, we shouldn’t pretend this means the housing market has returned to its pre-coronavirus state. Lockdown is set to continue in some form for an unknown amount of time, the resulting economic disruption will likely weigh down on activity in the for sale market.

“A Stamp Duty holiday proposed by RICS and others would likely see a stampede in transactions while an extended Help to Buy will support some sales and in turn housebuilding.

“Yet the government should think long term and introduce policies to reflect Britain’s changing housing needs. Private renters are a fast-growing part of the housing market and need catering to.

“Yet politicians seem intent in squeezing buy to let landlords out of the rental market and the build to rent sector – a positive emergence – simply isn’t big enough yet to absorb all rental demand.

“If the government cut Stamp Duty surcharge for landlords it could help stimulate the market by encouraging BTL investors to snap up homes to then rent out. Many landlords also help support housebuilding through off plan sales.

“The housing market as whole will also have to get ready for a digital-first approach to transactions as more tasks and jobs are done remotely.”

Dan Wilson Craw, Director of Generation Rent, said: “Lifting restrictions on the lettings market is welcome for thousands of renters who have been stuck in unsuitable homes. But a reopened housing market cannot be an excuse to lift the evictions ban which is in force until late June.

“Despite the furlough and increased housing benefit, 2.6 million private renters are at risk of arrears with no way of paying them off once the economy recovers. Just a third of landlords have offered flexibility on rent payments, so most of these renters will face eviction as soon as the ban is lifted.

“The worry and stress of the pandemic is giving renters sleepless nights. Many have difficult decisions to make right now. If Robert Jenrick is developing a plan that will reassure them, we need to know what it is urgently.”

Make landlords exempt from Stamp Duty surcharge to ‘help breathe life into housing market’

Published On: May 5, 2020 at 8:29 am


Categories: Landlord News

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Property management company Ringley believes that making buy-to-let landlords exempt from the Stamp Duty surcharge on second homes will help to kickstart the housing market post-coronavirus.

Mary-Anne Bowring, group managing director at Ringley, believes this could boost transactions and increase the supply of available rental properties at a time of growing demand.

The UK private rented sector has grown significantly in size in recent years, jumping from 2.8 million households in 2007 to 4.5 million in 2017, according to the Office for National Statistics. Ringley also highlights that Knight Frank has predicted nearly six million households– approximately a quarter of all households – will be privately renting by the end of 2021.

Despite this demand, the government has introduced regulations that make it more difficult to invest in the private rental sector. High Stamp Duty and reduced mortgage relief are a couple of examples. Now that COVID-19 has caused even more disruption and uncertainty, Mary-Anne warns there will be a spike in rental demand. Households are likely to put off major financial decisions, such as buying a home, and opt to rent for longer, underlining the need for more rental homes.

Mary-Anne of Ringley says the government should encourage BTL investors to return to the rental market to help meet the rising demand for rental homes and drive transaction levels. 

The Royal Institution of Chartered Surveyors has called for a Stamp Duty holiday once lockdown restrictions are eased and a number of volume housebuilders have announced they intend to reopen construction sites.

Mary-Anne says in addition to short-term help such as a Stamp Duty holiday, the government should also consider long-lasting structural reforms that reflect changing housing needs.

Bowring comments: “A stamp duty holiday would no doubt cause a rush of transactions and help breathe life into a housing market that has been put into deep freeze in an effort to battle coronavirus. 

“The government should be looking at long-term solutions as well as short-term sticking plasters when it comes to fixing the UK housing market.

“Millions of Brits were already renting, and that number was predicted to grow anyway with or without coronavirus. The disruption caused by coronavirus will likely see rental demand grow, as banks squeeze potential buyers with tighter lending restrictions and people put off buying or selling a home as it becomes clearer COVID-19 will cause continued uncertainty and disruption in the medium term.

“Eliminating additional stamp duty for buy-to-let investors would help stimulate the supply of rental homes while also driving wider activity in the housing market. Landlords are a crucial source of development finance through off-plan sales and will help support getting Britain building again.”

Election result to release pent up demand in housing market

Published On: December 18, 2019 at 9:04 am


Categories: Finance News

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The latest Mortgage Trends Update report by UK Finance has been released, showing the changes in the number of mortgages completed during October 2019.

The report highlights:

  • 32,260 new first-time buyer mortgages were completed in October 2019, 2.8% more than in the same month in 2018.
  • 33,370 homemover mortgages were completed in October 2019, 4.2% more than in the same month last year.
  • There were 18,910 new remortgages with additional borrowing, which was 20.8% fewer than in the same month in 2018. The average additional amount borrowed for these remortgages in October was £51,000.
  • There were 20,660 new pound-for-pound remortgages, 20% fewer than in October 2018.
  • 6,600 new buy-to-let home purchase mortgages were completed in October 2019. This was 1.5% fewer than this time last year.
  • There were 16,200 remortgages in the buy-to-let sector, 2.4% fewer than the same month in 2018.

Shaun Church, Director at Private Finance comments on UK Finance’s latest report: “The home-mover market is slowly getting back up and running, with the number of completions up 4.2% month-on-month.

“Thursday’s election result has delivered some clarity, in that some form of Brexit now seems inevitable. This greater certainty is likely to release pent-up demand, as the many sellers and buyers that have sat on their hands for the past couple of years will now be galvanised to pursue their home-moving ambitions.

“Easing house prices should also inspire prospective buyers to make a purchase. This window of opportunity won’t stick around forever, with prices likely to nudge back up as more activity returns to the market.

“Buyers that are seriously considering making a move in the New Year should act quickly to take advantage of the discount priced in to many properties up and down the UK, as well as the ultra-competitive mortgage rates currently on offer.”

You can read UK Finance’s full Mortgage Trends Update here.

Buy to Let is dead, long live Build to Rent

Published On: March 23, 2018 at 10:19 am


Categories: Lettings News

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With many people living in rented accommodation, in part due to difficulty in getting onto the property ladder, it seems it is the number of rented homes available that needs to expand.

  • Buy to let decline leaving vacuum for build to rent (Atlas Residential)
  • 69% of landlords put off further buy to let investment (Residential Landlords Association)
  • There are just 105,000 build to rent homes in UK so far, but sector ready to boom (Atlas Residential)

Buy to Let industry in decline

We’ve heard a lot about the 3% Stamp Duty levy on buy-to-let homes, the effect of which seems somewhat a punitive measure directly affecting private landlords. As a result, 69% of landlords surveyed by the Residential Landlords Association (RLA) have been put off making further investments.

Managing Director of Atlas Residential, Jonathan Ivory, says: “just as the UK needs more rental homes than ever before, the stamp duty change has significantly dented investors’ interest in providing those homes.

“We’re in danger of seeing a real vacuum in the buy to let market – many of those submitting their tax returns this April and May will be thinking carefully about alternative ways to make money.

“Thankfully, the build to rent sector is growing rapidly, providing the UK with the means to fill that vacuum.”

According to the institute of Fiscal Studies, just 25% of those born in the late 1980s owned a home by the age of 27, compared to 43% of those born in the late 1970s. This is quite a staggering statistic for such a short time frame – in just a decade, the housing market experienced significant shifts.

Due to the impact of recent tax hikes on the housing market, buy to let landlords are increasingly being put off new investments, and looking for other ways to generate income.

Build to Rent housing could be a futuristic solution

Despite the buy to let market becoming increasingly hostile, the government has stated it is committed to improving the UK’s housing market in other ways. In fact, the stamp duty levy on buy to let properties (as well as tougher lender criteria and the reduction on mortgage interest tax relief) could put buy to rent investors in a much better position.

Some measures the government may put in place include making planning permission harder to obtain. This mean it is likely to primarily have an effect on developers that might hold onto land simply to watch its value increase. This change could give rise to a generation of build to rent developers who are looking to create homes with the needs of the modern inhabitant in mind.

Atlas Residential and Rockspring Property Investment Managers LLP's complete and operational site, Bow Square, Southampton

Buy to Let is dead, long live Build to Rent – Bow Square, Southampton

As Ivory notes, “Build to rent provides an unprecedented opportunity to put renters’ needs first. Renters can enjoy premium facilities that have been shaped around the contemporary urban lifestyle. Demand for homes in the UK is stronger than ever and the build to rent sector is ideally positioned to meet that demand. It is also well placed to adapt to the changing needs of the market. As the build to rent sector in the UK evolves, family homes are starting to take shape.”

In the United States, build to rent communities are more widespread – with low-rise, family homes including facilities such as playparks and swimming pools on site. In the UK, the sector is still in its infancy with just 105,000 homes either complete, underway or planned. Considering the UK’s population now amounts to over 65 million people, this is a very small amount. With buy to let properties quickly losing their charm, the property development market in the UK is likely to look to build to rent developments to create the housing communities of the future.

First Time Buyers Driving the Housing Market in Huge Shift

Published On: September 27, 2017 at 10:11 am


Categories: Property News

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Although housing market activity has been growing modestly since the start of the year, first time buyers are now driving the market in a huge shift, according to the latest market commentary from UK Finance, for September 2017.

Overall housing market activity resembles what we saw just over two years ago, in 2015, the organisation reports.

The rise of the first time buyer

However, the mix of activity has shifted, with first time buyers driving the market, rather than cash and buy-to-let. The level of property transactions seen of late, of just over 100,000 a month since the turn of the year, is not expected to change much in the short-term, as the leading indicator of activity – house purchase approvals – has now returned to where it was at the beginning of the year.

First Time Buyers Driving the Housing Market in Huge Shift

First Time Buyers Driving the Housing Market in Huge Shift

The Bank of England’s (BoE) Agents’ survey suggests that part of the strength in first time buyer activity is down to demand for new build homes using the Help to Buy equity loan scheme. There are also several other Government schemes aimed predominantly at first time buyers, such as the Help to Buy ISA, which are no doubt helping to boost their numbers.

Benefitting much less from Government schemes, home movers have largely been treading water over the last few years. The shortage of homes on the market for sale has also meant that some would-be movers are struggling to find suitable homes, and so do not put their properties up for sale.

In the buy-to-let sector, Government interventions, coupled with regulation, have led to a flat market, with around 6,000 property purchases a month since April 2016, after the Stamp Duty surcharge on additional homes came into force.

Regional shift

As well as a change in the type of activity, there is some evidence to show that the regional mix has also shifted, away from London, the South East and East Anglia, towards the north of England, Wales and Scotland.

The common characteristic in this divergence is that regions that have typically been less affordable have shown signs of weaker activity, while regions that are relatively more affordable have been more buoyant. The latest Royal Institution of Chartered Surveyors (RICS) and BoE surveys also reflected this shift.

At a regional level, the difference in affordability (as measured by the typical income multiple for homeowners) between the most and least affordable regions has diverged since 2013, with the gap doubling over this period.

This trend may reverse, and we may see some rebalancing, if the shift in activity is sustained. It’s also the case that sentiment and price expectations in regions where affordability is stretched have weakened or are negative.

Remortgage activity

On the remortgage side, strong competition and low funding costs have meant a growing number of homeowners are taking advantage of the near record low mortgage rates. UK Finance expects more homeowners to refinance in the coming months, as prospects of the first interest rate rise in over ten years gain new impetus.

Buy-to-let remortgage activity has been growing until very recently, but the number of loans made over the past 12 months has been lower compared with the previous 12 months. Tax changes that come into effect in April this year are likely to restrict the ability or willingness of landlords to re-leverage their portfolios.

Lending in August 

Despite the shift in housing market activity, by buyer type and region, total mortgage lending has been stable, estimated to be £24.2 billion in August. Adjusting for seasonal factors, this figure would be £21.4 billion, which is in the same ballpark as monthly lending over the course of 2017.

While we won’t have the breakdown of August lending for some time yet, the drivers of lending are likely to be first time buyers and homeowners remortgaging, as has been the case for July. The picture in July is also similar to that of April, May and June, so a continuation doesn’t seem too unreasonable.

Looking ahead, UK Finance expects more of the same, though it anticipates that the pace of growth will slow somewhat, dampened by a potentially more challenging economic outlook.

Portfolio landlords

From 30th September 2017, portfolio landlords – those with four or more buy-to-let properties – will be subject to more specialist underwriting standards when applying for a new buy-to-let mortgage. This includes looking at the landlord’s experience in the buy-to-let sector, the cashflow associated with all of their existing properties, and inspection of their business plans.

UK Finance does not expect this to cause a surge in activity before the change, followed by a lull in buy-to-let purchases.