Residential Property Review

August 2019

A new era of renting – Build to Rent

A relatively new category in the rental market, Build to Rent, saw total investment of £2.6bn in 2018, an 11% increase from 2017 and it looks likely that this sector will continue to grow quickly.

Whilst home ownership remains an aspiration for many, figures show the private rented sector remains strong, growing from 3.7 million in 2009 to 5.4 million today, with many home-hunters choosing to rent long-term, often due to affordability and flexibility.

In contrast to many private landlords, Build to Rent providers often manage the whole building and seek to offer high levels of service and property management, as well as aiming to build a community.

The attractions of Build to Rent properties may include flexible tenancies with no fees or deposit, a monthly charge which includes all bills, facilities such as spas and gyms, on-site maintenance and community spaces.

Buyers’ market likely in second half of 2019

Recent research from Rightmove indicates that buyers may be able to obtain good deals in the remainder of 2019, with lower prices combined with high stock levels.

The research also shows that market fundamentals such as low interest rates and record employment levels remain strong. Additionally, mortgage availability remains good, as indicated by figures from UK Finance, showing the number of mortgage approvals from the main high-street lenders in May was up by 9.1% year-on-year.

Miles Shipside, Rightmove’s property expert said: “Those who have postponed their purchase should note that estate agency branches have more sellers on their books than at any time for the last four years, so there should be more choice of properties to buy. It could be a good opportunity to negotiate a relative bargain in the second half of the year, if they can set aside the continuing Brexit distractions.

He added: “With activity and prices often weaker in the second half of the year, it will be those sellers who are bold enough to price aggressively who will attract buyers with the confidence to act rather than hesitate. It would appear to be sellers in the upper end of the market who need to be boldest on pricing, as data shows that the middle and lower sectors are holding up better.

Brexit-related uncertainty remains in residential market

In its August Inflation Report, the Bank of England has reported that the housing market remains weak, but there are some signs of stabilisation.

The latest NMG survey, which is a biannual household survey commissioned by the Bank and covers over 6,000 households, revealed an expectation that house prices will decline a little over the next 12 months. The survey also revealed that around 20% of households who expect to move home in the next two years, reported having delayed their move due to Brexit-related uncertainty.

Nick Leeming, Chairman of Jackson-Stops said “The data makes it clear that continued uncertainty as we creep ever closer to leaving the EU without a deal has caused hesitancy in some areas of the property markets. Yet, once a firm decision has been made on when the UK will leave the EU and people decide to get on with their lives, we should expect to see a modest uplift in property prices in the new year.”

IS A 40-YEAR MORTGAGE A LIFELINE OR A LIFE SENTENCE?

Most people who choose a 40-year mortgage do so because they want a low monthly repayment. If you were to take a typical 25-year mortgage, your repayment would be higher. By stretching out the loan, monthly payments decrease.

WHAT YOU NEED TO CONSIDER

While lower monthly payments may be attractive and can represent your best chance of getting onto the housing ladder, there are downsides you should be aware of. Taking out a 40-year mortgage means you’ll pay more in interest, and you’ll find that you build equity, the amount of the property that you in effect own, more slowly.

Even if you don’t actually keep a 40-year mortgage for 40 years, the loan is designed with a 40-year timeframe in mind, so you could find that the interest rate is higher than it would be for a more traditional mortgage term. The chances are you’ll be making repayments in your retirement years, so that’s something you’ll need to consider. It makes sense to check that you can make overpayments if you can afford them and consider swapping to a shorter-term loan when your circumstances allow.

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.

Residential Property Market Review

July 2019

Our monthly residential 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.

Average earnings of £54,000 required to buy a home in the city

Property website, Zoopla has released data to show that first-time buyers now need an average income of £54,000 to purchase a typical property in a UK city. This average income figure has risen by 9% since 2016, largely due to higher property prices.

In the 20 cities that account for more than one-third of the UK’s housing stock, Zoopla found that Liverpool had the lowest gross household income required for first-time buyers, at £26,000. In addition to being named the most affordable city for first-time buyers, Liverpool was also the city with the highest house price growth, at 5% over the 12 months to May.

In contrast, an average household income of £84,000 is needed in London and whilst this may appear unattainably high, it is actually £3,250 less than the amount required in 2016 and the lowest figure for four years.

Outside the capital, Oxford and Cambridge require the highest typical household incomes at £69,000 and £72,000 respectively. However, these were down on £71,000 and £76,000 respectively three years ago.

Edinburgh’s prime property market sees slowing price growth

Recent data from Knight Frank shows that annual price growth in Edinburgh was down from 7.6% at the end of Q1 2019, to 4.3% in June. The data also shows a drop of 10% in price growth from the end of 2018.

Edward Douglas-Home, Partner at Knight Frank commented: “A moderation in property values is a sign that, having appeared relatively unaffected by the political uncertainty which has been impacting other prime regional markets since 2016, both buyers and sellers in the city are becoming more cautious“.

Whilst country house prices across Scotland fell in value by 0.1% in Q2 2019, the demand for family houses outside of the city centre has remained robust, especially in traditionally popular areas such as Morningside, Murrayfield and Newington.

The data also indicates that some vendors are in no rush to sell, with new listings across the whole market in Edinburgh being 15% lower in Q2 2019, compared to the same period in 2018.

Improving sentiment as new instructions hold steady

Supporting the emergence of a more stable trend across the residential market, a recent survey by Royal Institution of Chartered Surveyors (RICS) shows respondents reported (in net balance terms) a very modest rise in buyer demand and new instructions holding steady throughout June.

Last month, new buyer enquiries were up 10%, which is the first time since November 2016 where survey contributors reported an increase in appetite from potential purchasers. A further sign of stable market activity, according to Savills, is a continued rise in the number of mortgage approvals and increase in Loan to Value (LTV) ratios, with the national average LTV for first-time buyers now standing at 78%.

SHORTAGE OF SUITABLE HOMES SCUPPERS DOWNSIZING PLANS

Moving Home

Once their offspring have left home, parents can often find the family house is too big for their needs and expensive to maintain. That’s why, as retirement approaches, many people think about downsizing, and moving to a smaller, easier-to-manage home that’s cheaper to run.

However, it seems that suitable properties might not be that easy to find due to a shortage of retirement homes. The think tank Demos2 has estimated that the UK has a shortfall of around 22,800 new retirement properties, homes that are needed just to meet current demand. With an ageing population, this figure is likely to rise steeply over the coming years.

HOUSING SUPPLY PROBLEMS

If older people can’t find suitable smaller properties to move into, then their larger family homes aren’t freed up to meet the demand from younger families looking for the extra space they need to grow. A shortage of smaller properties, in particular bungalows, means that prices continue to remain high.

MEETING DEMAND

The research shows that around three million people aged over 60 would be interested in purchasing retirement properties. At present, many new housing developments are concentrated on providing 3, 4 and 5-bedroom homes, and in some parts of the country there are double the number of 4-bedroom properties on the market compared to two-bed homes.

Research from around the UK3 shows that in Cambridge and Rugby there were three four-bed homes available for every two-bed property. However, in St Helens, Hull and Sunderland two-bed properties outnumbered four-beds.

LOOK BEFORE YOU LEAP

There’s a lot to think about when you’re considering downsizing. If you’re looking to raise cash by making your move, you need to do your sums carefully to ensure that it would be worthwhile after taking into consideration all the various costs involved.

2Demos, 2017 
3Responsible Life, 2019

Get Me My Mortgage Lends A Hand With Broker Partnership

Go to Mortgage Broker

Finance expert, Get Me My Mortgage, has named My Mortgage Experts as its go-to mortgage broker.

A home run for mortgage specialists

As the way we live and work moves at breakneck speed, more and more people in the UK are self-employed or running their own business – which can make securing a mortgage a tricky proposition.  UK based, Get Me My Mortgage, specialises in securing mortgage deals for those whose circumstances don’t fit neatly into the standard requirements.  From the self-employed to those with less than perfect credit, Get Me My Mortgage is the first stop to getting on the first step of the property ladder.

A unique and innovative service, Get Me My Mortgage has the ability to search over 20,000 loans in order to match customers with the perfect broker for them and their circumstances – kind of like Tinder for mortgage hunters.  Once we’ve completed our matchmaking magic, the broker will take over all negotiations, including applying for the loan and liaison with solicitors and estate agents; taking the strain out of the complex and time-consuming process.  For those looking to seal the deal and get on the move quickly, Get Me My Mortgage even offers a fast track service – ensuring that customers don’t miss the boat on that perfect property. 

The dream team

Get Me My Mortgage is delighted to be affiliated with My Mortgage Experts; bringing together decades of experience and outstanding service.  Based in Northampton, My Mortgage Experts is the region’s go-to specialist for buying, remortgaging and conveyancing.  On the relationship with Get Me My Mortgage, Managing Director, Sam Hubbard, says, “At My Mortgage Experts, we subscribe to the Treating Customers Fairly initiative and, we’re delighted to be able to work with Get Me My Mortgage who share our business philosophy and ethos when it comes to getting our customers the best deal possible.”

For more information on Get Me My Mortgage, visit: https://www.getmemymortgage.co.uk/

For more information on My Mortgage Experts, visit: https://www.mymortgageexperts.co.uk/

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

IN THE NEWS…

FIVE-YEAR FIX GROWS IN POPULARITY

According to mortgage lenders and brokers, five-year fixed rate mortgage deals are now outselling two-year options. With some UK homeowners concerned about the outlook for the economy, more are choosing to lock into lower interest rates, especially as the difference between interest rates charged on five and two-year deals has narrowed in the past two years.

EQUITY RELEASE BREAKS RECORDS IN Q1

Equity Release Council4 figures show that the market has experienced its busiest start to any year on record. Q1 2019 saw £936m of property wealth unlocked by 20,397 customers, including 10,854 who took out new plans. Client numbers in Q1 2019 increased 10% year on year, while the total equity released increased by 8% and the number of new plans agreed rose by 6%.

IMPROVING MORTGAGE AFFORDABILITY

In some parts of the country, mortgage affordability has been rising at its fastest rate since 2011, helped by annual wage growth at 3.4%, and subdued house price growth. This is particularly good news for first-time buyers, as many mortgage rates remain competitive.

4ERC, Apr 2019

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.

SHOULD YOU REMORTGAGE?

Whilst everyone’s circumstances are different, remortgaging could make sense if you can get a better deal than the one you are currently on. You may, for instance, be able to find a deal that will mean you pay less interest, or one that gives you more flexibility, for example the facility to make overpayments so that you repay your mortgage quicker.

Given the hundreds of different mortgages available, getting professional advice will not only help you get the best deal for your circumstances, it will save you time and stress too. Get in touch.