MME Residential Property Review – September 2018

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.

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (JUL 2018)* 121.4*
           AVERAGE HOUSE PRICE £231,422
MONTHLY CHANGE 1.2%
ANNUAL CHANGE 3.1%

*(Jan 2015= 100)

    • UK house prices rose by 3.1% in the year to July 2018
    • House prices grew fastest in the North West region, increasing by 5.6%
  • House prices in London fell by 0.7% in the year to July 2018

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   1.2 3.0 £248,611
Northern Ireland
(Quarter 2 – 2018)
  -1.0 4.4 £132,795
Scotland   1.4 3.2 £152,245
Wales   -0.2 4.2 £157,368
East Midlands   -0.2 3.0 £188,716
East of England   1.3 2.4 £294,603
London   0.6 -0.7 £484,926
North East   2.6 2.8 £131,505
North West   3.4 5.6 £165,529
South East   0.4 1.8 £327,002
South West   2.4 4.4 £259,971
West Midlands Region   0.6 4.4 £195,447
Yorkshire & The Humber   0.4 3.3 £161,712
Source: The Land Registry
Release date: 19/09/2018 Next date release: 17/10/2018

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – JULY 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£352,138
(4.6%)
SEMI-DETACHED 
£216,785
(3.3%)
TERRACED
£187,242
(3.4%)
FLAT / MAISONETTE
£207,639
(0.6%)

Source: The Land Registry
Release date: 19/09/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

MORTGAGE ACTIVITY

  • July saw steady growth in gross mortgage lending, driven largely by remortgaging as homeowners locked into attractive deals in anticipation of the recent base rate rise.”Peter Tyler, 
    Director at UK Finance

Source: UK Finance
Release date: 24/08/2018

MME Your Home Finance – Summer 2018

In the edition find updates on:

PREPARATION IS KEY TO STRESS-FREE HOME BUYING
SMARTER WORKING
IMPROVE OR MOVE?
RETIREMENT MATTERS
DON’T UNDERESTIMATE THE VALUE OF INSURANCE
LOOKING FOR A MORTGAGE LATER IN LIFE
IT PAYS TO GET ADVICE
STAMP DUTY – WHO PAYS?

PREPARATION IS KEY TO STRESS-FREE HOME BUYING

A recent industry survey1 showed that 41% of people feel stressed by the mortgage process, taking the fun out of looking for a new home. This needn’t be the case and by following these top tips you can stay in control, save money and enjoy the experience.

SAVE, SAVE AND SAVE

In most cases, the bigger the deposit you can put down and the less you need to borrow, the lower your interest rate is likely to be. Don’t forget that your savings will also need to cover other charges like legal fees and survey costs, so budget for them to avoid any nasty surprises.

MONTHLY OUTGOINGS

It pays to take a long hard look at your income versus your outgoings; any lender considering your mortgage application will expect you to be on top of your bills and to be able to afford your monthly mortgage payments. Check your standing orders and subscriptions and cancel any you can manage without. Also, keep a keen eye on how much you spend on luxuries like entertainment and meals out.

CHECK YOUR CREDIT SCORE

Lenders will expect you to have a healthy credit score. A higher score usually means you are a lower risk; the more points you score the better the chances that you’ll get credit at better rates.

GET PROFESSIONAL ADVICE

Getting advice will save you time, money and stress. We are on your side, have access to a wide range of mortgage deals, know the industry and can offer useful advice on all aspects of the home buying process. We can help you get an in-principle decision from a lender, which gives a seller the confidence that you are a serious purchaser.

KNOW YOUR ESTATE AGENT

First-time buyers with mortgage offers in place are attractive to sellers as they can proceed more quickly than another buyer who has yet to sell. Make sure that the estate agent is aware of your position, so they can pass this information on to sellers. Keep in regular contact and build a rapport with the agent.

DON’T FORGET THE SURVEY

Once you’ve found somewhere you want to buy, make sure you get a professional survey. A surveyor will identify structural problems that could be expensive to remedy.

1Trussle, 2018

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.

SMARTER WORKING

The government has committed to making the home buying and selling process quicker, cheaper and less stressful. To this end, a programme of measures was announced in April, designed to streamline property sales.

TIGHTER CONTROLS

Under the proposals, estate agents will be required to obtain professional qualifications, and the practice of gazumping, where higher offers are accepted after a sale has been agreed, will be actively discouraged by the introduction of voluntary reservation agreements. (The existing process in Scotland already makes gazumping less likely there).

Local authority searches will be subject to a time limit, meaning that solicitors acting for buyers should be able to obtain the information they need within ten days. Managing agents and freeholders will be required to provide lease information for a set fee within an agreed timescale.

FINDING THE ANSWERS

To ensure that buyers and sellers are better informed about the property process, a series of guides are to be published that will cover the key facts about each stage. These will also set out pertinent questions that anyone buying or selling should ask to help ensure their property transaction proceeds smoothly.

IMPROVE OR MOVE?

New evidence suggests that, in England and Wales, many more of us are putting down roots and choosing to stay in our current homes for longer.

It used to be that homeowners moved four times after their first purchase but now it is closer to two. Research1 carried out by Queen’s University Belfast points to a major cultural change, and highlights that at least a million fewer people moved between 2001 and 2011 compared with 1971 to 1981.

RENOVATION WORKS

This trend is borne out by recent research from insurer Hiscox2. They have identified a five-fold increase in the number of homeowners who have chosen to renovate their existing home in the last five years. This choice is likely to be influenced by a range of factors such as the continued rise in house prices in some regions, predicted rises in interest rates, additional costs such as stamp duty, a lack of suitable property on the market, tighter mortgage lending criteria and economic uncertainty around Brexit. Additionally, in some parts of the country property prices have hardly moved, meaning that families are held back because they have made little or no profit on their existing home.

In 2013, the research2 showed that just 3% of homeowners chose to improve as an alternative to moving, but five years later, this figure has risen to 15%. Local council figures show that requests for planning permission have risen by 29% in the last ten years.

OUTWARDS AND DOWNWARDS

Increasingly homeowners are looking to adapt their property to meet their changing needs, with an extra bedroom high on the agenda of many families. Loft extensions head the list of alterations and digging out basements to create extra accommodation is becoming increasingly popular, especially in London.

1Queen’s University Belfast, Fewer people moved house in the ’00s than the ’70s, 2018
2Hiscox, Renovations and Extensions Report, 2018

RETIREMENT MATTERS

Homeowners approaching retirement face a number of challenges when considering their future and need to make their money work hard for them.

STAMP DUTY

The Adam Smith Institute believes that Stamp Duty Land Tax should be scrapped. Amongst their reasons is the view that the prospect of paying stamp duty on a smaller home acts as a disincentive to older people wishing to downsize. For example, stamp duty adds another £2,500 to the cost of buying a retirement property priced at £250,000; that is in addition to solicitor’s fees, surveys, valuations and removal costs. (Figures differ under Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.)

RELEASING EQUITY

Those looking to raise cash to bolster retirement income are increasingly turning to equity release. It represents a way of accessing some of the value tied up in a property while avoiding the costs and upheaval of downsizing. Although there are set-up fees, most costs are delayed until you die or go into permanent residential care.

It’s important to remember that in most cases, equity release means that the loan you take out against the equity tied up in your property will increase over time as interest is rolled up. When you die, the property will be sold and the loan repaid. Although interest rates on equity release plans are higher than on a conventional mortgage, lower interest rates over the last few years have made equity release more attractive to many.

Remember to discuss equity release with your family as it will impact on the amount that they are likely to inherit.

INTEREST-ONLY MORTGAGES

Equity release is increasingly coming to the aid of those approaching retirement with an interest-only mortgage without the funds to pay back the capital on maturity and their retirement income insufficient to cover ongoing interest costs. Whilst they may not have paid off any capital, they may have built up equity, offering them a lifeline allowing them to stay in their home.

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.

Equity release may require a lifetime mortgage or home reversion plan. To understand the features and risks, ask for a personalised illustration.

DON’T UNDERESTIMATE THE VALUE OF INSURANCE

Insurance policies are designed to provide financial safeguards and valuable peace of mind. If you’re a homeowner then it makes sense to have plans in place that protect you, your family and your home.

LIFE INSURANCE TAILORED TO YOUR NEEDS

There are various plans designed to protect you and your family:

·         Life policies – these provide a taxfree sum for those you leave behind in the event of your death. If you have a mortgage, it’s a big financial responsibility and no-one would want to leave their family with money worries at a sad and difficult time.

·         Critical illness cover – this means that if you are diagnosed with a serious illness as defined in your policy, there’s a cash payout to help alleviate financial worries and protect your family.

·         Income protection – these policies provide a monthly pay-out that helps pay your mortgage and other living costs in the event of an accident, sickness or involuntary unemployment.

PROTECT YOUR POSSESSIONS AS WELL AS YOUR HOME

Buildings insurance covers you for damage to the structure of your home. When you take out a mortgage, your lender will require that you have buildings insurance in place and that it covers the cost of rebuilding the property and its permanent fixtures and fittings. The rebuilding cost isn’t the same as your property’s market value, it’s generally a lower figure which will be detailed in your lender’s valuation report or arrived at by using an online calculator.

Mortgage lenders don’t insist that you have cover for your home contents but it makes good sense to protect them against risks like burglary, fire and flood. You can also arrange insurance for valuable items like jewellery, and those belongings you use away from home, such as laptops.

If you would like some help in ensuring you have the right protection policies for your needs, do get in touch.

LOOKING FOR A MORTGAGE LATER IN LIFE

With people getting on to the property ladder at all stages in life, a growing number are looking for mortgage finance in their 50s and beyond. This has created demand for greater flexibility, and lenders are now beginning to address the needs of this age group.

THE OLDER BORROWER

Following the Mortgage Market Review in 2014, banks and building societies were required to adopt stricter lending criteria and affordability checks, and as a result many lenders restricted both their maximum borrowing and repayment age.

However, we know the lenders in the marketplace who are happy to cater for specific mortgage needs such as this and we can help with the process. Older borrowers still need to go through the usual checks to ensure they can afford to make their monthly mortgage repayments and they will also need to show proof of income and declare all outgoings, including any debts.

Lenders will consider issues that could affect an older borrower’s income, such as their state of health, and in the case of joint borrowers, what would happen to their finances if one of them were to die. A lender will assess whether a loan is affordable in the case of a potential borrower in receipt of a pension, as opposed to one who is likely to retire half way through the mortgage term.

On the other side of the coin, older borrowers can often be free of other commitments that can burden younger borrowers – they are further into their careers and probably earn more, their children may have left home, and many may have already come into money through a family inheritance.

TAKE ADVICE

Getting advice can really help. We know the marketplace and so are able to ensure that your application goes to a lender who caters for your specific mortgage needs.

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.

IT PAYS TO GET ADVICE

Buying a house involves making lots of decisions, some simpler than others. Finding the right house in your chosen location can be the easy part, finding the best and most suitable mortgage deal for your financial circumstances can prove to be more of a headache.

With so many mortgage deals available in the market how do you know which one represents the best value? The market is very competitive and if you’re not familiar with the way it works and the terminology, it can be hard to understand what is on offer.

FINDING THE BEST DEAL

We are seeing more people choosing to work with a mortgage adviser. They understand that it helps to work with someone who can explain all that is on offer to ensure they get the mortgage best suited to their needs. At this potentially stressful and expensive time it really does help to work with an expert and someone who shares your commitment to making the right choice.

Like properties, mortgages come in many shapes and sizes such as fixed, variable and tracker. You’ll also find that lenders offer mortgages with different interest rates that can be fixed for various time periods. However, looking just at the interest rate that’s being charged can be misleading. Although a low rate may look enticing, you also need to check out the fees and charges. These could be high, resulting in you paying more than if you had chosen a mortgage with a slightly higher rate of interest.

There are also special deals available that include extras such as survey fees, legal costs or cashback arrangements. We can help you work out which ones are worth going for.

SAVE MONEY AND TIME

Working with us will save you time, money and stress. We will be able to compare the deals available from various lenders, taking into consideration things like fees and charges that will affect the overall cost of your mortgage. We will ensure that your mortgage application goes to the most appropriate lender. What’s more, we are on hand from start to finish and can provide help with many other aspects of the house-buying process, like getting your offer accepted, finding solicitors and organising property surveys. We’ll also give you good advice about putting protection policies in place. These are designed to provide financial safeguards that mean your mortgage is paid if you experience one of life’s unexpected events.

So, if you’re a first-time buyer, second-stepper, re-mortgager or would-be buy-to-let landlord, looking for professional mortgage advice, why not put us to the test?

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.

STAMP DUTY – WHO PAYS?

Recent figures1 show that second home buyers and landlords head the list of those who paid the most in Stamp Duty Land Tax in 2017. Since the changes introduced in 2016, anyone buying a second home or rental property for more than £40,000 has had to pay an additional 3%.

The government raised £9.5bn from stamp duty payments last year, the highest level ever seen in the UK, and second home buyers and landlords paid almost half of that figure. A purchase of a second property worth £500,000 would now be subject to £30,000 in stamp duty; if the same property was bought as a main residence, the bill would be £15,000.

First-time buyers by contrast now pay no stamp duty on properties worth less than £300,000 and reduced tax duty on properties worth less than £500,000.

Despite the capital experiencing a cooling in its property market, London buyers accounted for 39% by value of all stamp duty payments in 2017. Figures differ for Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales; under both, a 3% surcharge applies on additional properties.

1London Central Portfolio, 2018

Residential Property Review – June 2018

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.

Record high seen for £1million plus house sales

Recent Land Registry figures state that despite a small decline in the number of £1million plus houses sold in the UK in the first half of 2017, the second half saw a rebound. This culminated in a 5% increase in sales to 14,474 in 2017, a record high compared with 13,748 seen in 2016. This compares with only 7,862 £1 million plus house sales, recorded in 2012.

Whilst London remains the location that represents 60% of £1million plus house sales, other areas across the country were represented in the data. Eighteen local authorities outside the capital reported such sales, including Elmbridge in Surrey, Windsor, Maidenhead, the Chilterns, and South Bucks.

Louise Santaana of Lloyds, who analysed the Land Registry figures, stated: “As always, the highest number of transactions took place in the capital last year, however growth in London has started to slow for million pound properties. Overseas investors represent a good share of this end of the London market and some may be holding off buying, pending further clarity over Brexit.

Value of Scottish housing market rises to more than £160bn in last decade

A recent report from Registers of Scotland (RoS) states that the total value of the residential housing market in Scotland was £161.3bn in the period spanning 2007-8 to 2017-18.

Amongst their findings, RoS revealed that residential sales registered with a mortgage declined from 84.5% in 2007-8, to 68.3% in 2017-18. Another key finding from the report states that with 11,969 sales transactions reported, new-build property represented 11.7% of all-Scotland sales in 2017-18.

Kenny Crawford, the Business Development and Information Director of RoS, said: “The Scottish property market is a significant component of the Scottish economy. Overall, house prices remained relatively stable until 2012-13, but have been generally increasing since then.

He went on to add: “However, volumes in 2017-18 were the highest since 2007-8 and have been increasing year on year from the recent low of 70,507 in 2011-12

NHBC Foundation and Savills investigate new-build buyers’ preferences

The old adage ‘location, location, location’ being the primary driver for house purchase decision making has been challenged by a joint report from the National House Building Council and estate agents Savills.

Whilst location remains a major factor, other priorities have been identified as being of greater importance for new-build buyers. The top seven priorities for first-time buyers identified by the report, in order of preference, are Help to Buy availability, minimum maintenance, new home warranty, off-street parking, location, living space and neighbourhood. For first-time buyers, the top five amenities to be located near are; a bus stop, tube / tram / train links, convenience store, supermarket and local NHS services. Upsizers are more focused on education, with proximity to primary and secondary schools, ranking among their top five important amenities to be near when selecting a new-build home.

With Help to Buy a priority, this clearly outlines how rapidly the policy has impacted the housing market.

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (APR 2018)* 119.0*
AVERAGE HOUSE PRICE £226,906
MONTHLY CHANGE 1.2%
ANNUAL CHANGE 3.9%
*(Jan 2015= 100)

  • UK house prices rose by 3.9% in the year to April 2018
  • London was the slowest growing region at 1%
  • The South West was the fastest growing region with an annual growth rate of 6.1%

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   1.1 3.7 £243,639
Northern Ireland
(Quarter 1 – 2018)
  0.3 4.2 £130,026
Scotland   2.5 5.6 £148,952
Wales   1.6 4.4 £156,495
East Midlands   1.3 4.8 £184,480
East of England   -0.8 2.5 £286,447
London   2.4 1.0 £484,584
North East   4.2 4.5 £130,489
North West   0.0 2.4 £155,868
South East   0.9 3.5 £324,530
South West   1.8 6.1 £255,207
West Midlands Region   0.8 5.9 £192,090
Yorkshire & The Humber   1.4 3.5 £158,545
Source: The Land Registry
Release date: 13/06/2018 Next date release: 18/07/2018

 

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – APR 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£342,154
(3.8%)
SEMI-DETACHED 
£214,717
(5.3%)
TERRACED
£184,304
(4.7%)
FLAT / MAISONETTE
£202,052
(1.0%)

Source: The Land Registry
Release date: 13/06/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

MORTGAGE ACTIVITY

  • There were 26,700 new first-time buyer mortgages completed in the month, 3.5% higher than April 2017
  • The number of first-time buyers has grown year on year, outstripping the number of homemovers
  • There were 5,000 new buy-to-let house purchase mortgages completed in the month, 5.7% fewer than April 2017

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date: 25/05/2018

Residential Property Review – May 2018

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.

 

Highest number of vacant houses in England for decade

The UK government’s ‘Ministry of Housing, Communities and Local Government’ has revealed that the number of vacant residential properties across England has risen for the first time in a decade, by 2.6% in 2017 to 205,293. This figure represents 0.9% of the housing stock available across the country; according to estate agent Savills.

Regionally, London appears to be the hotspot, with 20,237 properties being left empty long-term in 2017, followed by Birmingham with 4,280 and Bradford with 3,931.

The Chief Executive of estate agent ‘HouseSimple’, Sam Mitchell, said that having empty housing stock on this scale, in a country suffering a supply crisis “…is a situation that needs to be addressed urgently.


Help needed to shop around for cheaper mortgage deals

The City regulator, the Financial Conduct Authority (FCA) has stated that, with over 80% of the UK’s household liabilities comprising mortgage debt, it should be made easier for mortgage owners to shop around for lower-priced deals, particularly as the Bank of England is signalling a rise in interest rates in the near future.

Whilst the FCA acknowledges that competition in the mortgage market is currently “working well” for many people, it hopes that lenders may make their lending criteria available to other market lenders and that it should be made easier for borrowers to be able to compare mortgage brokers’ offerings.


The Executive Director of Strategy and Competition at the FCA, Christopher Woolard was quoted as saying: “For many the market is working well with high levels of consumer engagement. However, we believe that things could work better with more innovative tools to help consumers.”

Construction of luxury flats in central London falls in 2017

According to London Residential Research (LRR) and the highend estate agents London Central Portfolio (LCP), starts for new-build luxury flats in central London fell by 25.4% in 2017, compared with the previous year. LRR report that seven of the eleven inner London boroughs covered by its research saw declines; with Southwark seeing a 62% fall – despite the major development at Elephant & Castle – whilst Wandsworth also saw a decline of 42%. Altogether, the inner London boroughs have seen a fall of 3,810 new-build units being constructed.

LCP’s Chief Executive, Naomi Heaton, commented on this data: there was “a huge oversupply of over-commoditised new-build boxes” in London. “An awful lot of what was built was generic and overpriced and they struggled to sell It.

 

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (MAR 2018)* 117.6*
AVERAGE HOUSE PRICE £224,144
MONTHLY CHANGE -0.2%
ANNUAL CHANGE 4.2%
*(Jan 2015= 100)

  • UK house prices grew by 4.2% in the year to March 2018
  • Scotland showed the highest annual growth at 6.7%
  • The second fastest growing region was the East of England at 5.8%

 

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   -0.3 4.0 £240,949
Northern Ireland
(Quarter 1 – 2018)
  0.3 4.2 £130,026
Scotland   0.5 6.7 £146,009
Wales   -0.1 3.5 £152,999
East Midlands   -0.6 5.6 £184,736
East of England   1.0 5.8 £291,415
London   -0.9 -0.7 £471,944
North East   -1.5 2.1 £124,381
North West   -0.3 5.2 £157,461
South East   -0.2 3.3 £320,682
South West   -0.3 4.9 £249,839
West Midlands Region   -0.8 5.1 £188,697
Yorkshire & The Humber   -0.3 3.7 £155,251
Source: The Land Registry
Release date: 23/05/2018 Next date release: 13/06/2018

 

AVERAGE MONTHLY PRICE BY PROPERTY TYPE – MARCH 2018

PROPERTY TYPE ANNUAL INCREASE
DETACHED
£342,722
(5.3%)
SEMI-DETACHED 
£210,283
(4.6%)
TERRACED
£180,941
(4.6%)
FLAT / MAISONETTE
£200,157
(2.0%)

Source: The Land Registry
Release date: 23/05/2018

Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.

 

MORTGAGE ACTIVITY

Gross mortgage lending in March is estimated to have been £20.5bn

  • This is 2.3% lower than one year earlier

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date: 26/04/2018

Are first-time buyers still underestimating the importance of a broker?

“First-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey”

Just 28% of potential first-time buyers plan to finance their property with a mortgage arranged by a broker, according to a survey by Yorkshire Building Society.

The research found that aspiring first-time buyers are underestimating the importance of a broker when they start their house-hunt.

However, of those who have purchased their first property within the last 12 months, almost half (47%) said they eventually turned to a broker for help with their mortgage.

Findings from the report also indicate almost a third (32%) of potential first-time homeowners would aim for a detached house as their first property and nearly half (49%) would consider a semi-detached house. Less than a quarter (24%) would be happy to settle for a studio or flat.

The findings also revealed how important purchasing a first home is to potential borrowers, with nearly two in five (39%) saying it is more important to them than any other life event, including getting married or having children.

Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said: “Buying a house is one of the biggest financial commitments someone can make in life so it’s no surprise that we see a shift in first-time borrowers turning to a broker for help in taking that important first step on to the property ladder.

“It does however highlight that first-time buyers may not necessarily be factoring in support from brokers early on in their home buying journey, perhaps because they’re unaware of how intermediaries can help. This shows there is still much opportunity for brokers to promote their services to help guide aspiring buyers to a mortgage best suited to their needs, at a potentially overwhelming time of their life.

“Our latest First-Time Buyers Report offers an insight into the world of first-time buyers and could help give brokers a better understanding of the challenges they face for example, or what they’re looking for in a property or mortgage which could help brokers when they are speaking to clients just starting out.

“From a customer point of view, it shows that an earlier conversation with a mortgage broker could help prospective first-time buyers consider their options and understand the possibilities sooner in the process.”

Article written by – Rozi Jones – Financial Reporter – http://www.financialreporter.co.uk/mortgages/are-first-time-buyers-still-underestimating-the-importance-of-a-broker.html

Residential Property Market Review – February 2018

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.

First-time buyers reach a ten-year high

One of the UK’s biggest mortgage lenders, Halifax, has reported that the number of first-time buyers in the UK has reached a ten-year high at 359,000. The average deposit for these purchases has climbed by 91% over the last decade.

To put that into perspective, the average house deposit back in 2007 was £17,740, this has rocketed to £31,339 today. This can be largely attributed to the fact the average house price has risen by 21% (or £37,377) over the last ten years to £212,079.

The Halifax Managing Director, Russell Galley was quoted as saying: “This ten-year high in the number of first-time buyers shows continued healthy movement in this key area despite a shortage of homes and the ongoing challenge of saving enough of a deposit.”

Residential development land – values on the rise

In their recent Market in Minutes research paper on UK residential development land, Savills reports that residential land values have moved away from their historically benign state as land values are beginning to increase and competition for sites intensifies. This is particularly noticeable in the North of England and in Scotland. As a result of this, Savills forecast higher than average house price growth in Northern England over the next five years.

The report goes on to say that strategic land is a focus for investors and developers. Several major housebuilders are aquiring more of this strategic land, as it allows them to maintain their margins and retain greater control over their land pipelines.

At the same time medium-sized housebuilders are purchasing larger sites, with the typical build now encompassing an average of 87 plots per development, versus 72 plots seen in 2016.

Government’s new-build housing target doubtful

The Royal Institution of Chartered Surveyors (RICS) recently reported that just 12% of respondents to their survey believe that the government will be able to reach its target of 300,000 new-build homes across the UK over the next few years.

One of the main reasons cited by respondents to the survey for this perceived shortfall is the severe shortage of skilled workers and in particular, trained professionals, such as quantity surveyors.

Difficulty in finding suitable sites with the required planning consent is also seen to be a crucial problem, together with the lack of local authority infrastructure funds being made available for the necessary amenities to be put in place for such developments.

House Prices Headline statistics

HOUSE PRICE INDEX (DEC 2017)* 118.9*
Average House Price                         £226,765
Monthly Change 0.4%
Annual Change 5.2%
*(Jan 2015= 100)

·         The North East of England saw the highest monthly gain of 2.7%

·         The South East of England saw the only monthly decline (-0.5%)

·         London average house price now £484,173

House Prices Price change by region

Region

 

Monthly Change (%)

Annual Change (%)

Average Price (£)

England 0.4 5.0 £243,582
Northern Ireland
(Quarter 3 – 2017)
  1.0 4.3 £130,482
Scotland   0.2 7.7 £148,783
Wales 1.0 5.4 £154,398
East Midlands   0.6 6.3 £185,694
East of England   0.2 5.2 £290,341
London   0.8 2.5 £484,173
North East   2.7 3.6 £130,838
North West   0.2 5.9 £158,370
South East   -0.5 4.2 £322,269
South West   1.0 7.5 £254,081
West Midlands Region   0.1 6.3 £191,050
Yorkshire & The Humber   0.2 2.8 £156,781
Source: The Land Registry
Release date: 13/02/2018 Next date release: 20/03/2018

UK Unemployment Figures

·         There were 32.15 million people in work

·         There were 901,000 people (not seasonally adjusted) in employment on “zero-hours contracts”

·         There were 8.77 million people aged from 16 to 64 who were economically inactive

Jobless total
1.47m

Unemployment rate
4.4%

Source: Office for National Statistics
Release Date: 21/02/2018

Mortgage Activity

·         2017 saw highest number of first-time-buyers in decade

·         5,300 new Buy-to-Let mortgages completed in December

·         There were 30,800 First-time-Buyers in December

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
13/02/2018

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

TENANTS TUNE IN – BUY-TO-LET LANDLORDS RAISING RENTS

Landlords facing higher interest rates, increased stamp duty and the phased loss of their buy-to-let tax breaks are beginning to pass on these increases to their tenants in the form of rent rises.

TAX CHANGES STARTING TO BITE

The tax changes were announced in 2015 by the then Chancellor, George Osborne, who saw them as a way to ‘level the playing field’, deterring buy to- let landlords from acquiring those properties that could instead be bought by first-time buyers anxious to enter the housing market.

The new tax rules mean that landlords who were able to claim mortgage tax relief worth 40% or 45% will find their relief restricted to the basic rate of 20% once the changes are fully implemented in 2020.

For the 2017–18 tax year, landlords are only able to offset 75% of their mortgage interest payments for tax purposes. This figure decreases by 25 percentage points each year until none can be accounted for in 2020–21, although a 20% tax credit will help. In addition, from April 2016, anyone purchasing an additional residential property for £40,000 or more pays a stamp duty surcharge of 3%.

RENT RISES

Data from the Association of Residential Lettings Agents suggests that these changes are already filtering through to the lettings market. In November 2016, only 16% of agents saw landlords increasing rents, but that figure had risen to 35% by November 2017, and is widely expected to rise further over the coming months. Following the recent rise in interest rates, it’s likely that more landlords will be considering offsetting their rising costs by raising rents.

In addition, lenders have introduced more stringent vetting procedures for those landlords who own four or more mortgaged properties, and this may give rise to further changes in the dynamics of the buy-to-let market.

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 Review – January 2018

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.

 

UK house prices increased 5.1% to November 2017

In their recent UK Residential Market Survey, the Royal Institution of Chartered Surveyors (RICS) reports that UK house prices increased 5.1% in the year to November 2017, a 0.3% decrease on October figures. Estate agents report that stock levels remained stable and new buyer enquiries stabilised, and for the 23rd consecutive month the net balance for new instructions remained negative in November.

The latest Bank of England Agents’ summary of business conditions, outlined that housing market activity moderated in Q4 2017, following a pickup in activity post-summer. Demand remained weak in the secondary market and in London, particularly for high-priced properties. Demand for new housing showed signs of softening across the UK in the last three months of 2017.

House price growth to slow in 2018

Respected news agency Reuters, reports that their recent poll of 28 housing market participants reveals that residential property prices will increase by 1.3% across the UK in 2018.

Some of the factors behind this prognosis include the possibility of continuing political and economic uncertainty ahead of Brexit in 2019, the possibility of further interest rate rises, weaker consumer confidence, falling real wages and issues surrounding mortgage affordability.

Leasehold sales on new build homes to be banned in England

The Government has announced that people purchasing new build homes will no longer be required to enter leasehold agreements. This follows a consultation where thousands of homeowners criticised leasehold practices. In some instances people have been subject to vastly increasing ground rents, others have had their freehold sold to investment companies, and were required to pay large sums to purchase it.

The Government’s Communities Secretary, Sajid Javid said that: “It’s unacceptable for home buyers to be exploited through unnecessary leaseholds, unjustifiable charges and onerous ground rents. It’s clear from overwhelming response from the public that real action is needed to end these feudal practices.

Given that this initiative from the Government will require new legislation, it will be some time before it can be enacted. It is unclear what relief, if any, there will be for the 1.4 million households in England who already own their house under leasehold arrangements.

Relocation from London reaches 10-year high

According to The Guardian, in the first six months of 2017, 292,000 people left the capital for other parts of the UK. This represents an increase of 14% compared with a decade earlier and is the highest level recorded since 2006. This exodus has primarily been driven by people leaving London’s increasingly expensive residential property market. In addition, London’s financially stretched local authorities are attempting to house their homeless residents in more affordable locations outside of the city.

HOUSE PRICES HEADLINE STATISTICS**

HOUSE PRICE INDEX (NOV 2017)* 118.6*
AVERAGE HOUSE PRICE £226,071
MONTHLY CHANGE 0.1%
ANNUAL CHANGE 5.1%
*(Jan 2015= 100)

  • An annual price increase of 5.1%, which takes the average property value in the UK to £226,071
  • The North East saw the largest monthly fall in value of 1%
  • The West Midland Region saw the largest annual gain in value (7.2%) to Nov 2017

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   0.1 5.3 £243,339
Northern Ireland
(Quarter 3 – 2017)
  3.0 6.0 £132,169
Scotland   1.1 3.6 £145,992
Wales   -0.7 4.5 £152,855
East Midlands   0.2 6.4 £185,047
East of England   -0.2 6.0 £289,731
London   -0.9 2.3 £481,915
North East   -1.0 2.3 £127,737
North West   1.4 6.2 £159,066
South East   0.3 5.7 £325,270
South West   -0.5 6.2 £251,923
West Midlands Region   1.3 7.2 £192,119
Yorkshire & The Humber   -0.8 3.0 £155,778
Source: The Land Registry
Release date: 16/01/2018 Next date release: 16/02/2018

 

UK UNEMPLOYMENT FIGURES

  • There were 32.08 million people in work, 56,000 fewer than for May to July 2017 but 325,000 more than a year earlier
  • 8.86 million people aged 16 to 64 were economically inactive
Jobless total
1.43m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 13/12/2017**
** Latest data available

 

MORTGAGE ACTIVITY

  • First-time-buyer market performs better than expected
  • Resilience in jobs market strengthens mortgage demand
  • Buy-to-let market remains sluggish


Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 28/12/2017

WHY 70% OF BUYERS PREFER TO USE A MORTGAGE ADVISER

There’s an awful lot to think about when you’re looking for a mortgage. It’s not surprising that these days, 70% of buyers are choosing to work with a mortgage adviser to help ensure they get the most appropriate deal for their financial circumstances.

There are hundreds of deals on offer, so how do you find the right, most cost-effective deal? Should you fix the rate, if so, how long for? What about deals offering ‘extras’, would they suit your needs? Making the wrong choice about your mortgage could cost you hundreds, even thousands of pounds more than you need to pay.

By talking to us, rather than trawling umpteen websites and spending hours putting in applications to a range of lenders, you can save yourself stress and time. You’ll also be able to tap into a wealth of good advice that can help ensure you make a success of your property purchase.

GETTING THE BEST ADVICE

We are professionally-trained and know an awful lot of useful stuff, not only about the mortgage market, but about the whole home-buying and selling process. We can also offer tips on everything from finding a solicitor, to getting the right type of property survey

We’ll be able to help you every step of the way, offering advice on making sure your finances are in order before you put your application in, and helping you put in place the right type of insurance policies to protect your mortgage and your home.

MAKING YOUR APPLICATION

Although all lenders operate broadly the same lending criteria, the way in which they interpret the rules will differ. We can ensure that your application is made in the right way to the most appropriate lender.

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 REVIEW – December 2017

Buy-to-Let landlords continue to feel the pinch

In their latest ‘UK Cross Sector Outlook’, Savills Research have noted that following the summer budget of 2015, the government’s alterations to Buy-to-Let (BTL) regulations and taxation, have seriously dented the enthusiasm of many potential landlords. Savills report that UK Finance have calculated that the number of BTL mortgages granted in the year to August 2017 was 75,300. This represents a fall of 47% from the year to March 2016. Furthermore, the actual growth in the number of outstanding BTL mortgages is lower still – now standing at 24,800 – which suggests that landlords are divesting in this sector.

October’s data sees a boost to remortgaging

UK Finance have stated in their non-seasonally adjusted data release that loans for remortgaging and for house purchases rose, when compared with the previous month and with the same period in 2016.

Given the current economic climate, both capital and interest payments for new loans are at an all-time low, which reflects the increasingly competitive nature of the mortgage-lending market.

June Deasy, Head of Mortgage Policy at UK Finance said: “Over the last year, the number of loans for remortgaging have been at record levels; this trend looks set to continue further as we head towards the end of 2017 and borrowers seek to take advantage of low interest rates. Mortgage repayments as a percentage of income still remain at, or close to, their historic low point, and despite the recent base rate rise, we can expect monthly mortgage payments to remain affordable for the vast majority of borrowers.

Conflicting data released by the Land Registry

In its latest data release, the UK Land Registry, which collates completion data across the country, has recorded the average residential property price in the UK at £223,807 in October. This represents an annual positive price change of 4.5%, and a slight monthly fall of 0.5%. They stated that the Royal Institution of Chartered Surveyors (RICS), whose members they canvass for the data, reported that headline near-term price expectations slipped to -11% from -8% in September and has now been negative in each of the last three months. The Bank of England found that housing market demand has strengthened overall, but with the usual regional divergence

HOUSE PRICES HEADLINE STATISTICS

HOUSE PRICE INDEX (OCT 2017)* 117.4*
AVERAGE HOUSE PRICE £223,807
MONTHLY CHANGE -0.5%
ANNUAL CHANGE 4.5%
*(Jan 2015= 100)

  • An annual price increase of 4.5%, which takes the average property value in the UK to £223,807
  • The North West saw the largest monthly fall in value of -2.0%
  • Northern Ireland saw price growth of 3.0% over Q3 2017

HOUSE PRICES PRICE CHANGE BY REGION

Region   Monthly Change (%) Annual Change (%) Average Price (£)
England   -0.6 4.7 £240,860
Northern Ireland
(Quarter 3 – 2017)
�� 3.0 6.0 £132,169
Scotland   -0.7 2.8 £143,544
Wales   0.8 4.5 £153,316
East Midlands   0.2 7.0 £184,544
East of England   0.1 6.1 £289,168
London   -0.9 2.1 £481,102
North East   -0.1 2.4 £127,224
North West   -2.0 3.9 £154,056
South East   -0.5 4.6 £322,311
South West   0.2 6.7 £251,376
West Midlands Region   -1.1 5.2 £186,351
Yorkshire & The Humber   -1.1 3.3 £155,281
Source: The Land Registry
Release date: 12/12/2017 Next date release: 16/01/2018

UK UNEMPLOYMENT FIGURES

  • There were 32.08 million people in work, 56,000 fewer than for May to July 2017 but 325,000 more than a year earlier
  • 8.86 million people aged 16 to 64 were economically inactive
Jobless total
1.43m
Unemployment rate
4.3%
Source: Office for National Statistics
Release Date: 13/12/2017

MORTGAGE ACTIVITY

  • The number and value of loans for remortgaging and for house purchases rose in October
  • First-time buyers borrowed £5.1 billion, up two per cent on the previous month
  • Home movers borrowed £7 billion, up 2.9 per cent on September

Source: UK Finance (formerly Council of Mortgage Lenders)
Release date:
 12/12/2017

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.