Residential Property Review – July 2017

Our monthly property market review is intended to provide background to recent developments in property markets as well as to give an indication of how some key issues could impact in the future.


Remortgage approvals steady

The Bank of England (BoE) reports that mortgage lending in the UK recorded an annual increase of 2.9% to May 2017.

The BoE also records 65,202 house purchases for May, up marginally from the 65,051 seen in April, but still below the sixmonth average of 66,990.

Remortgage approvals rose to 42,955, again higher than the last month’s figure of 40,437, but below the average of 44,069.

It is likely that this gentle decline can probably be put at the door of rising inflation and the subsequent squeeze on disposable incomes.

Each new house built adds £316,000 to the economy

Research from the consultancy group Arcadis, entitled ‘Building Homes – Making Places’, shows that each new house built in the UK generates £316,000 for the economy.

Their calculations state that £250,000 is created via taxes and job creation for each build, £53,000 into businesses through direct spending, with £13,000 going to local communities through the rise in investment into local services.

Regeneration spokesperson for Arcadis, Peter Hogg, said: “The benefits of building more homes are much greater than previously thought.” He went on to add that: “Following the shock election result, government must now work closely in cross-party cooperation to genuinely deliver on housing promises, along with devolved administrations up and down the country needing to take the lead around starting to build…“.

More potential ‘Downsizers’ are looking at equity release

As many as 17% of potential downsizers are now looking at switching to lifetime mortgages, a popular type of equity release, as an alternative option to raise funds. This has been prompted for many by the cost involved with moving house and the subsequent emotional upheaval caused by moving, combined with the possibility of having to relocate away from close family and friends.

Bower Retirement reports this in their latest ‘Adviser Tracker Research’, which also details that 55% of their canvassed advisers recounted clients changing their minds about downsizing because of the costs involved, choosing to investigate what equity release options are available instead.

Where now for the housing market?

PwC’s latest UK Economic Outlook expects house price inflation to be 3.7% this year, down from 7% last year. London’s housing market will slow, with 2.8% and 3.8% growth on average in 2017 and 2018 respectively. With above average growth continuing in the east and southern regions of England.

Market analysts have different perspectives following the election result. The Head of Residential Research at JLL commented: “It will be crucial that the new champions of housing market policy in government can reaffirm commitments to the current policy direction.” He continued: “…the housing crisis deserves greater ambition and bold action from the new government. This requires cross-party support to de-politicise solutions and to provide longerterm backing for new solutions.

The Sales Director of Seven Capital held the view that residential property “…will remain robust and resilient, delivering capital growth for investors.


House Prices Headline statistics

HOUSE PRICE INDEX (MAY 2017)*   115.8*
Average House Price                                 £220,713
Monthly Change                                         0.5%
Annual Change                                            4.7%
*(Jan 2015= 100)

·         Average house price stands at £220,713

·         UK house prices grew by 4.7% in the year to May 2017, 0.6 percentage points lower than in the year to April 2017.

·         East of England showed the highest annual growth, with prices increasing by 7.5% in the year to May 2017


House Prices Price change by region

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England 0.5 5.0 £237,662
Northern Ireland
(Quarter 1 – 2017)
  -0.8 4.3 £124,007
Scotland   0.7 3.5 £143,106
Wales 0.6 3.8 £149,817
East Midlands   1.3 7.2 £180,903
East of England   0.7 7.5 £284,097
London   -0.3 3.0 £481,345
North East   1.8 1.6 £126,738
North West   0.7 3.8 £153,297
South East   -0.3 4.8 £315,807
South West   0.4 5.5 £243,969
West Midlands Region   0.8 5.3 £183,942
Yorkshire & The Humber   1.1 4.4 £155,268


Source: The Land Registry
Release date: 18/07/2017 Next date release: 15/08/2017


UK Unemployment Figures

·         The unemployment rate is 4.5%, down from 4.9% a year earlier

·         There were 8.83 million people aged from 16 to 64 who were economically inactive

Jobless total                  1.49m
Unemployment rate    4.5%
Source: Office for National Statistics
Release Date: 12/07/2017


Mortgage Activity

·         Gross mortgage lending reached £20.1 billion in May

·         CML says: “Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.

Source: Council of Mortgage lenders
Release date:


The buy-to-let market looks set to change in the coming years as April’s tax changes start to bite. Buy-to-let landlords have already faced changes in Stamp Duty Land Tax in England and Wales, and Land and Buildings Transaction Tax in Scotland. New landlords, or those wanting to take on new loans, will also find themselves subjected to tougher underwriting standards operated by lenders.

The Council of Mortgage Lenders believes that the size of the buy-to-let market will fall in the next couple of years from the £40bn level seen in 2015 and 2016. Some commentators are suggesting that the contraction could be to around the £30bn mark.


Landlords are relying more on cash in the face of tougher lending criteria. According to estate agents Countrywide, the proportion of landlords purchasing properties with 100% cash has steadily increased from 41% in 2007 to 61% today.

In the face of the tax changes, some landlords have decided to set up limited companies. By doing so, they can borrow through the company and still offset their finance costs against their rental income. However, this solution doesn’t suit every buy-to-let landlord’s investment strategy, and some commentators have suggested that the government might make this subject to tougher taxes too. The limited company route can also give rise to potential stamp duty charges and capital gains tax liabilities.

Landlords are also turning their attention to commercial property, with the number of residential landlords diversifying into commercial property tripling in the past three years. They are now opting for shops, restaurants and offices as alternatives, with retail units and small offices proving particularly popular.


Landlords opting for commercial property will need to be able to evaluate a business and the quality of a tenant when considering offering a commercial tenancy. With businesses like cafes and small shops, it’s important to know the local area and be able to gauge if the business is likely to succeed.

Commercial property landlords will need to familiarise themselves with the rules surrounding commercial leases, the rights a landlord has and the responsibilities of the tenant. Commercial property can offer various benefits. The yields are generally higher and many of the costs that a landlord should deal with under a residential tenancy are the responsibility of the tenant under a commercial let.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.