All posts by Christine Rouse

London-a positive place to buy

The London housing market shows resilience according to the CBRE Global Living report. According to CBRE Residential, investments in urban areas such as transport infrastructure, connectivity, retail, cultural centres and housing are key drivers of economic growth.

The coming Elizabeth line railway, that will stretch over 60 miles across London will stop at 41 accessible stations and is expected to serve around 200 million people each year. This improvement in the connectivity of many districts will reduce journey times significantly.

The Help to Buy London scheme is set to be revised and continue for a further two years. The scheme is an equity loan provided by the Government. In the scheme, the government currently lend up to 40% of the cost of a new build home in London, so the purchaser will need a minimum 5% deposit and a 55% mortgage to make up the rest.

Currently Central London properties have an average value of £659,660 (according to the current Zoopla estimate at time of publication, these figures are subject to change) whereas the average for the rest of the UK is £236,619.

Why invest now?

As a large city, London has few areas where more properties can be built, therefore the lack of house supply will always be a factor in pushing house prices up in the long term. In the current market, many mortgage products are available plus interest rates are at a historic low so it could be viewed as a very good time to invest. London also has a large and growing rental population, with private renters currently making up 28% of the city’s households.

Discounting

Sellers are realising that if they want to progress they are going to have to offer a discount. The current economic climate means that there are many reasons why people are putting off buying.

Today, buyers are in a strong position. The biggest savings can be made in the highest-value areas such as London, where house prices have been falling and transactions have been low for the longest time. This is reflected in data by LonRes, which shows that the number of properties going under offer in the second half of last year was 6 per cent higher than the same period in 2017.

 

 

As an example of small signs of recovery in the London market, the average price for property in Islington (London Borough) stood at £794,100 in May 2019. This is a rise of 2.17% in the last three months (since February 2019) and rise of 12.07% since 12 months ago. (according to the current Zoopla estimate at time of publication, these figures are subject to change.)

Henry Knight from Springtide Capital commented:

“Clients who may have delayed for a year or two waiting for clarity, are unlikely to be willing to delay further. With mortgage rates close to historic lows, buyers across the country are getting back to business as usual and are re-establishing the search for their dream home.

With house prices in London still down from their peak, this represents a good time to buy.”

Sources:

https://www.cbreresidential.com/uk/en-GB/content/london-0

https://www.cbreresidential.com/uk/en-GB/researc

https://www.halifax.co.uk/media-centre/house-price-index/

https://www.zoopla.co.uk/house-prices/london/

https://tfl.gov.uk/travel-information/improvements-and-projects/elizabeth-line

https://www.helptobuylondon.co.uk/equity-loan/equity-loans

https://www.helptobuylondon.co.uk/

https://www.lonres.com/public/resources/latest-publications/lonres-firstsight-now-time-buy-prime-central-london

https://www.zoopla.co.uk/house-prices/islington-london-borough/

Gross mortgage lending for March 2019 stands at £20bn

According to the latest Household Finance Update from UK Finance, Gross mortgage lending across the residential market in March 2019 was £20 billion, 0.5 per cent lower than the same month in 2018.

  • In March 2019, approvals for home purchase were 9.3 per cent higher, remortgage approvals were 11.1 per cent higher and approvals for other secured borrowing were 1.7 per cent higher year-on-year.
  • The number of mortgages approved by the main high street banks in March 2019 was 9.1 per cent higher than March 2018, which was a particularly subdued month for total mortgage approvals.

THE ECONOMY

  • The Office of National Statistics reported that Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.8% in March 2019, unchanged from February 2019.
  • The Consumer Prices Index (CPI) 12-month rate was 1.9% in March 2019, unchanged from February 2019.

HOUSING

Halifax House Price Index

House prices in the three months to March were 2.6% higher than in the same three months a year earlier. In the latest quarter (January to March) house prices were 1.6% higher than in the preceding three months (October to December)

  • On a monthly basis, house prices fell by 1.6%
  • The average house price is now £233,181

Russell Galley, Managing Director, Halifax, said:  

“The average UK house price is now £233,181 following a 1.6% monthly fall in March. This reduction partly corrects the significant growth seen last month and again demonstrates the risk in focusing too heavily on short-term, volatile measures. Industry-wide figures show that the number of mortgages being approved remains around 40% below pre-financial crisis levels, and we know that lower levels of activity can lead to bigger price movements”.

Housing Minister warns housebuilders on Help To Buy

Help to Buy boosted the supply of new homes to 222,000 last year and the scheme has been extended a further two years until 2023.  However, allegations of poor standards and high hidden charges have been raised in recent years as numbers of new-build homes have increased.  In his speech at the Home Builders Federation annual conference, James Brokenshire, warned the UK’s biggest housebuilders that he would be “considering carefully how the developers who work with us meet the standards and quality that customers expect and deserve” before the launch of the updated Help to Buy scheme in England in 2021.

Bank of England Statistics for March 2019

The Bank of England’s Monetary Policy Committee (MPC) at its meeting ending on 20 March 2019, voted unanimously to maintain Bank Rate at 0.75%.

Henry Knight, Managing Director of Springtide Capital commented:

“The impact on Mortgages is minimal, mortgage rates have not yet begun to climb and this represents great opportunities for buyers in the current market”

Sources:

https://www.ukfinance.org.uk/data-and-research/data/household-finance/household-lending-and-deposits

 

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/march2019

 

https://static.halifax.co.uk/assets/pdf/mortgages/pdf/March-2019-House-Price-Index.pdf

 

https://www.ukfinance.org.uk/news-and-insight/news-in-brief/news-brief-27-march-2019

 

https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2019/march-2019

 

Ways to maximise the value of where you live now

In an uncertain property climate, many homeowners are considering improving their current homes with a view to adding value to the property they are in now.

A remortgage for home improvements allows a homeowner to withdraw funds from equity in their home. The equity can be used to spend on home improvements for example extensions, new bathrooms, loft conversions, possibly improving the value of the property overall. Here we outline just a few of the possible ways to do this.

 

Convert your garage into living space

Potential Value Added: 15%

Converting your garage into living space, especially if not used for a car and if you have parking space outside your property is a consideration to add value.

According to This is Money, just 22% of owners park their car in a garage in the UK and approximately 3.9 million garages have been converted into living space in the last two decades.

Not all garages are suitable for conversion and you should check if you need planning permission.

 

Extend the kitchen with a side-return extension

Potential Value Added: 15%

A side return is a narrow alley that runs adjacent to the kitchen in a typical terraced or semi-detached house. Extending the kitchen into the side return and to the full width of the rest of the house means you gain valuable space and can also improve the layout.

You’ll still have to comply with building regulations, and work will be inspected at key stages of the build, either by the local authority building department or by an approved independent inspector.

 

Loft conversion to add a bedroom

Potential Value Added: 15%

An extra bedroom can add up to 15 per cent to the value of your home, especially if it’s a loft conversion with an ensuite bathroom. Most lofts can be converted, but it’s worth getting an architect or builder to double check before you start.

The website RESI reports that it’s the loft conversion that offers more added value than building an extension. By creating a whole new room within the loft space, a bedroom with ensuite or study, more value is added than if expanding an existing space, for example a kitchen or dining space.

 

Increase living space with a conservatory

Potential Value Added: up to 10%

To merge indoors with outdoors, choose a fully glazed conservatory.

The biggest part of your conservatory will be the glass, so explore your options carefully. There are many options to suit all lifestyles.

If you are looking to remortgage, at Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstance.

To speak to us today, call Springtide Capital on 020 3040 4400

 

Sources:

https://www.propertypriceadvice.co.uk/home-improvements/ten-of-the-best-ways-to-add-value-to-your-home

https://www.thisismoney.co.uk/money/cars/article-3315204/3-9m-home-owners-converted-garage-living-space-20-years.html

https://resi.co.uk/advice/loft-conversions/loft-conversions-add-value-to-your-home

 

 

UK House prices and regional variations

UK House prices and regional variations

House prices remained relatively resilient in 2018, despite anxiety about Brexit and concerns about affordability. While property prices were relatively flat in 2018, some regions did perform better than anticipated.

On the whole the average British property’s value increased by £2,860 in 2018, or £8 a day according to property website Zoopla, a rise of just 1.02 per cent.

Affordability levels remain attractive in many areas outside of southern England and locations, such as the Midlands and northern cities saw strong property inflation. The best performing English region was the East Midlands, where prices rose by 2.91 per cent to an average of £220,746.

Conversely London and the South East reported stagnant or falling markets. London saw property values drop 1.67 per cent to an average of £653,587 this year, according to Zoopla.

Meanwhile, the East of England saw a 0.5 per cent fall to £357,952, but the South East and South West both saw 0.38 per cent rises to £409,923 and £307,693, respectively.

In Scotland, property values rose by 6.43 per cent, while in Wales they climbed 3.98 per cent, but in England gains were a marginal 0.58 per cent.

 

HOW PROPERTY VALUES CHANGED ACROSS BRITAIN IN 2018
Ranking Region Current average value % increase in value since January 2018
1 Scotland £195,739 6.43%
2 Wales £192,362 3.98%
3 East Midlands £220,746 2.91%
4 North East England £190,242 1.92%
5 Yorkshire and The Humber £179,809 1.64%
6 West Midlands £230,823 1.60%
7 North West England £195,897 0.45%
8 South West England £307,693 0.38%
9 South East England £409,923 0.38%
10 East of England £357,952 -0.50%
11 London £653,587 -1.67%
Source: Zoopla December 2018

 

How will what we know change post Brexit?

The market predictions for the situation post Brexit are many and varied. While nobody knows the impact it will have here are some suggested outcomes.

 

The Royal Institution of Chartered Surveyors (Rics)

2019 UK house price growth prediction: 1 per cent

 

Rics estimates that prices will rise by one per cent in 2019, although surveyors believe that uncertainty about Brexit is likely to hit the UK housing market well into next year.

The group is expecting the number of homes being sold, as well as the prices that they are being sold for, to edge down over the next three months. Residential properties are taking an average of four months to sell, the longest period since records began in 2016.

“It is evident from the feedback to the latest Rics survey that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market,” said Rics’ chief economist, Simon Rubinsohn.

 

CBRE

2019 house price growth predictions in London: 0 per cent

 

In CBRE’s predictions for the coming years, London house prices are set to be flat in 2019, but picking up by 1.6 per cent in 2020 and by 3.5 per cent in 2021. Between 2019 and 2023, the realestate adviser is expecting growth of roughly 10.5 per cent in the capital’s house prices.

 

Savills

2019 UK house price growth prediction: 1.5 per cent

2019 London house price growth prediction: -2 per cent

 

Savills says that it is affordability, rather than Brexit, which is the major factor for the UK housing market. The property giant is forecasting that UK house prices will rise 14.8 per cent from 2019-2023, although there will be significant regional variation.

While London is projected to see growth of 4.5 per cent over this period, it will dip by two per cent in 2019, while the north west is expected to see a 21.6 per cent rise over the period. London’s prime market will also see double digit growth at 12.4 per cent.

 

 

Whatever the outcome of Brexit on the market, the fact that house purchase approvals were up in December maybe suggests that people are planning ahead and making their move before the March deadline.

 

Sources:

https://www.dailymail.co.uk/property/article-6516361/What-happen-house-prices-2019.html

http://www.cityam.com/270596/uk-house-prices-2019-experts-say-happen-after-brexit

https://www.ukfinance.org.uk/data-and-research/data/household-finance/household-lending-and-deposits

 

 

Gross Mortgage Lending Figures January 2019

According to the latest Household Finance Update from UK Finance, gross mortgage lending for January 2019 was £21.6bn, 1.5% lower than a year earlier.

  • The number of mortgages approved by the main high street banks in January 2019 was 0.3 per cent higher than the same month the previous year.
  • Approvals for home purchase were 1.5 per cent higher and approvals for other secured borrowing were 6.8 per cent higher.
  • Following several months of strong growth in remortgaging earlier in 2018, remortgage approvals were 3.1 per cent lower than in the same month the previous year.

THE ECONOMY

The Office of National Statistics reported the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.8% in January 2019, down from 2.0% in December 2018.

  • The Consumer Prices Index (CPI) 12-month rate was 1.8% in January 2019, down from 2.1% in December 2018.

HOUSING

HALIFAX HOUSE PRICE INDEX

House prices in the three months to January were 0.8% higher than in the same three months a year earlier – down from the 1.3% annual growth rate recorded in December.

  • On a monthly basis, house prices decreased by 2.9% in January, following a 2.5% rise in December
  • The average house price is now £223,691
  • House prices in the latest quarter (November-January) were 0.6% lower than in the preceding three months (August – October)

 Russell Galley, Managing Director, Halifax, said:

“Attention will no doubt be drawn towards the monthly fall of -2.9% from December to January, the second time in three years that we have seen a drop as a new year starts. However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%”

Henry Knight, Managing Director of Springtide Capital commented:

 “The last quarter in 2018 saw even more first-time buyers get a foot on the housing ladder, due partially to the competitive deals on offer. With these mortgages completed and an uncertainty in the market in general surrounding Brexit, January 2019 was always going to be a cautious month in the market”

Bank of England Statistics for January 2019

Net mortgage borrowing by households fell slightly on the month to £3.7 billion, but was slightly below the £3.9 billion average of the past six months. Mortgage approvals for house purchase (an indicator of future lending) increased in January to 66,800, slightly above the average of the previous six months of 65,500. Approvals for remortgaging ticked-up to 50,400, marginally higher that the recent average of 48,900.

Sources:

https://www.ukfinance.org.uk/data-and-research/data/household-finance/household-lending-and-deposits

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/january2019

https://static.halifax.co.uk/assets/pdf/mortgages/pdf/January-2019-Halifax-House-Price-Index.pdf

https://www.bankofengland.co.uk/statistics/money-and-credit/2019/january-2019

 

 

 

 

 

Positive Stories in an Uncertain Mortgage Climate

 

There is much uncertainty in the UK currently around Brexit and the ongoing implications for the country. The looming effect of which is an unknown for the Mortgage Industry.

The Brexit Effect:

How the mortgage market performs this year is going to be somewhat dependent on Brexit and its impact on general economic conditions and consumer confidence. There is general apprehension that buyers may remain cautious whilst waiting for the Brexit deal to complete. This may mean that the usual spike in sales in the first few months is not evident.

There are however, some positive areas in the current climate….

Low Mortgage Rates

Mortgage rates are incredibly low currently and many will want to fix into a low rate to give themselves security as we move into a period of uncertainty.

David Blake of Which? Mortgage Advisers says ‘Don’t just jump into a fixed rate without considering the alternatives – there are plenty of flexible products that would leave your options to remortgage open if rates did start to change. Brexit is still a complete unknown”.

Henry Knight, Managing Director from Springtide Capital comments:

“In using a mortgage broker, you will receive an expert opinion on which is the best mortgage for you in terms of the interest rate and the likelihood of your application being accepted. This expertise will save significant time and by having an in depth understanding of the whole market, a broker is able to add value by advising on what is and isn’t possible from the outset in this current uncertain climate”

Positive foundations for Housebuilding

Arguably the largest obstacle facing the housing market in general, is demand and was highlighted in a recent warning that English housebuilding figures are set to be the lowest in any decade since the Second World War.

The government is aiming for 30% of new housing in England to be self-build and custom build, which means there are opportunities for mortgage providers to be part of this growth.

The Autumn Budget and the extension to the Help to Buy scheme for a further 2 years was welcomed. The demand for new-build homes remains strong helping builders to plan ahead to increase output in the coming years.

Both the government and the lending community are working hard to close the supply gap, and we should expect to see this continue over the coming year.

Stewart Baseley, executive chairman of the Home Builders Federation, says: ‘Unlike the wider housing market, where transactions have dropped considerably from the historical norm, the new-build market has remained strong in recent months – a trend we expect to continue. ‘The confirmation in the Budget of an extension to the Help to Buy scheme was welcome. The scheme is ensuring demand for new-build homes remains strong [and]… the certainty of demand is enabling builders to plan ahead to increase output in the coming years, as is demonstrated by the record high number of planning permissions being granted.’

 

First Time Buyer Market Share at Highest Level Since 1995

One positive growth area currently is in the First Time buyer market. Analysis from Yorkshire Building Society estimates that 367,038 first-time buyers secured mortgages in 2018, up from 362,800 in 2017.

The current figure represents almost double that of 2008 (193,300) and stands just 9% lower than the 2006 pre-crisis peak of 402,800. First-time buyer levels are now said to represent 50% of all homes bought with a mortgage, meaning that the first-time buyer market share has reached its highest level since 1995.

Strong competition in the market that have been driving mortgage rates down have helped this figure. As have Government initiatives such as Stamp Duty relief, Help to Buy equity loans and Help to Buy ISAs.

Uncertain Times

One thing that all elements of the Mortgage market will be looking forward to is a period of stability post Brexit. And whilst there are positive steps being taken and some growth areas, Brexit is undoubtedly fuelling a sense of apprehension in the housing market. With details of the final deal still unknown, there is a high probability that both buyers and sellers will continue to hold off on making decisions. The Mortgage industry remains realistic in their expectations for 2019.

At Springtide Capital we provide high quality impartial mortgage advice. We are a specialist mortgage broking business committed to providing a personal and efficient service. We understand the complexities of finding the right loan to suit both your financial and personal circumstance.

To speak to us today, call Springtide Capital on 020 3040 4400

Sources:

 
 
 
 

Later Life Lending

 

Older borrowers are discriminated against by many lenders, but the tide is turning slowly.

The financial services industry is playing an increasingly central, and essential, role in retirement security. Growing numbers of older people face ongoing decisions about how to manage their income and assets over a longer period than previous generations, this presents both opportunity, and challenge, for the later life lending sector.

There is an ever-increasing demand for a broad range of retirement borrowing products. With the average life expectancy having risen considerably and mortgage lending requirements extending well into borrowers’ 60s and 70s, borrowers needing a mortgage into retirement are often routinely turned down by mortgage lenders on the basis of their age alone. This approach means over 50s needing to remortgage can find it difficult to secure a home loan.

There are many reasons why individuals may need to borrow later in life, from home improvements to helping children get on the property ladder.

As stated in the publication Mortgage Strategy:

‘With changing trends in home buying seeing people going through the home buying cycle later in life than a few decades ago, the retirement lending market is embarking on a period of unprecedented growth’

In a survey of intermediaries by Marsden Building Society, receiving a ‘personal approach’ from all sides was of key importance to clients.

Intermediaries were ‘adamant’ there was a need for a more personal approach to underwriting when looking at older borrowers, and it’s not always straightforward placing a later life lending case because criteria could change significantly from lender to lender.

Using a broker can be a great way of finding a lender who will consider your application – a broker will know which lenders are happy to lend to certain demographic groups.

It’s important to seek independent legal advice before taking an equity release or home reversion product in order to understand the impact any plan will have on inheritance tax planning.

Jim Boyd, chief executive of the Equity Release Council, agreed that “advice is everything”

Henry Knight, Managing Director at Springtide Capital comments:

“In an ageing population, we recognise the importance of providing specialised advice for those looking for a mortgage later in life. Later Life Lending can help a variety of client needs such as: repaying debts and mortgage, supplementing retirement income, home improvements or providing financial assistance to your family. We deliver solutions tailored to your personal situation and advise on Equity Release schemes such as Lifetime and Interest only mortgages”

To understand the features and risks of a Lifetime mortgage, speak to one of our qualified specialists about providing you with a personalised illustration.

To speak to us today, call Springtide Capital on 020 3040 4400 to book an appointment with a mortgage consultant. 

Sources:

https://www.yourmortgage.co.uk/remortgage/age-against-the-machine/

https://www.financialreporter.co.uk/later-life/fse-midlands-advisers-warned-over-retirement-interest-only-recommendations.html

https://www.mortgagefinancegazette.com/lending-news/equity-release/call-individual-approach-later-life-lending-25-09-2018/

https://www.mortgagefinancegazette.com/lending-news/whats-important-later-life-clients-05-09-2018/

https://www.mortgagestrategy.co.uk/borrowers-options-beyond-65th/

 

 

Gross Mortgage Lending for September 2018

Gross mortgage lending for September was £21.5bn

  

According to the latest Household Finance Update from UK Finance, gross mortgage lending for September 2018 was £21.5bn, 1.2 percent lower than September 2017, due to cautious buyers.

 

  • The number of mortgage approvals by the main high street banks in September was 9.1 percent lower than September 2017, and approvals for house purchases were 10.1 per cent lower.

 

  • Within the above figure, remortgage approvals were 7.4 percent lower than for the same period a year earlier.

 

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.2 percent in September 2018, down from 2.4  percent in August 2018.

 

Housing

 

 

The Autumn Budget Statement

The Government delivered it’s Autumn Budget and the Chancellor of the Exchequer, Philip Hammond reaffirmed his commitment to the UK housing market with a series of announcements. We’ve covered these in more detail here and in summary:

  • A new Help to Buy scheme announced from April 2021
  • Stamp Duty relief extended to first-time buyers buying shared ownership properties
  • Affordable Homes Programme progresses
  • Further grant funding in London announced
  • Housing Revenue Account Cap is abolished

Communities Secretary Rt Hon James Brokenshire MP stated:

“This Budget provides positive news for those struggling to get on the housing ladder with certainty given on the future of Help to Buy and freeing up councils to deliver a new generation of council housing.”

Henry Knight, Managing Director of Springtide Capital commented:

 

“The decline in gross mortgage lending reflects weaker consumer confidence with affordability, Brexit and uncertainty over interest rates leading to more cautious buyers. However, measures announced in the recent Budget should help to improve accessibility for first-time buyers, although we expect the subdued activity in London’s housing market is likely to remain as buyers defer making major financial commitments.”

 

 

 

Sources:

https://www.ukfinance.org.uk/household-finance-update-september-2018/

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/september2018

https://static.halifax.co.uk/assets/pdf/mortgages/pdf/October-2018-House-Price-Index.pdf

https://www.gov.uk/government/news/budget-to-support-new-housing-high-streets-and-local-services

 

Autumn Budget 2018

Housing highlights from the Autumn Budget 2018

The Government delivered it’s Autumn Budget and the Chancellor of the Exchequer, Philip Hammond, reaffirmed his commitment to the UK housing market with a series of announcements:

  • A new Help to Buy scheme from April 2021
  • Stamp Duty relief extended to first-time buyers buying shared ownership properties
  • Affordable Homes Programme progresses
  • Further grant funding in London announced
  • Housing Revenue Account Cap abolished

Help to Buy extended

The government was under significant pressure to revise the Help to Buy initiative and continue the scheme beyond its 2021 deadline. The Autumn budget delivered the following:

  • A revised scheme that is restricted to first-time buyers will be launched in April 2021.
  • It includes regional property price caps to ensure it is more targeted to people who need it most. Prices will be capped at 1.5 times the current forecasted average first-time buyer price in each region – with a maximum of £600,000 set in London.
  • The government says it has no plans to continue offering Help to Buy equity loans beyond March 2023.

Stamp Duty

  • The Budget extended relief to all first-time buyers of shared ownership properties worth up to £500,000.
  • This change is retrospective, meaning that first-time buyers who bought a shared ownership property with a price up to £500,000, since 22 November 2017, can claim a refund.
  • Phillip Hammond stated that the recent Stamp Duty changes have so far helped 121,500 buyers placing first-time buyers in a more positive position within the UK housing market.

Affordable Homes Funding Boost

  • Nine housing associations were allocated £653 million from the Affordable Homes Programme, to deliver over 13,000 additional affordable housing starts by March 2022.
  • £1 billion of new guarantees to support small and medium sized builders was implemented by the British Business Bank.

Grant Funding in London’s Docklands

  • Grant funding of £291 million for vital infrastructure on the Docklands Light Railway in East London has been announced.
  • The release of pressure on existing services in the area has the potential to unlock over 18,000 homes.

Non-resident stamp duty consultation

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-residents buying a home in England and Northern Ireland.

Housing Revenue Account Cap is abolished

The Housing Revenue Account cap has been abolished in the Autumn Budget, allowing councils to increase house-building to around 10,000 homes a year. The Housing Revenue Account cap was considered the biggest obstacle to councils initiating the building of new homes.

Consultation of Planning Reforms

In the Autumn statement the government announced that they plan to build on existing planning reforms to make it easier to extend existing buildings upwards to create new homes and support the regeneration of high streets. A consultation on the proposed planning reform aims to simplify and speed up the planning system allowing more effective use of land and, ultimately, deliver more homes.

Henry Knight, Managing Director, Springtide Capital commented: “Springtide Capital welcomes the steps taken in the budget, which provides a number of opportunities to bring momentum into the housing market. The announcement that the Help to Buy scheme in particular is extending beyond its initial 2021 deadline will help more people to get on the property ladder and is positive news for first-time buyers.”

Sources:

https://www.gov.uk/government/news/budget-to-support-new-housing-high-streets-and-local-services

https://www.which.co.uk/news/2018/10/autumn-budget-2018-property-and-help-to-buy/

https://www.gov.uk/government/consultations/planning-reform-supporting-the-high-street-and-increasing-the-delivery-of-new-homes

 

 

 

Gross mortgage lending for July was £24.6bn

 

According to the latest Household Finance Update from UK Finance, gross mortgage lending for July 2018 is 7.6 percent higher than the same time last year.

  • The number of mortgage approvals by the main high street banks in July fell by 0.8 per cent year-on-year.
  • Within the above figure, remortgage approvals were 2.8 per cent higher than for the same period a year earlier.
  • There was a fall in house purchase and other secured borrowing of 0.6 per cent and 11.7 per cent respectively.
  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.3% in July 2018, unchanged from June 2018.

HOUSING

 Average House Price hits new record

  • The Halifax House Price Index reported that house prices in the three months to July increased by 3.3% against the same period in 2017.
  • The average UK house price is now £230,280, the highest on record, indicating that house prices are still growing in many areas, despite the economic uncertainty over Brexit.

UK Finance’s Mortgage Trends in London Update for Quarter 2 2018

  • There were 6,800 new mover mortgages completed in London in the second quarter of 2018, 8.1 per cent fewer than in the same quarter of 2017. The £2.77bn of new lending in the quarter was 8.6 per cent down year-on-year.
  • A total of 15,200 new remortgages in London completed in the second quarter, some 16.9 per cent more than in the same quarter a year earlier. The £4.84bn of remortgages in the second quarter was 23.2 per cent more year-on-year as buyers were keen to search out competitive deals pre the expected Bank of England base rate rise last month
  • The average first-time buyer in the capital is 32 and has a gross household income of £68,000.

Fundamental review on Help to Buy policy to be launched

  • Almost 170,000 families have now taken advantage of Help to Buy since its launch in 2013. That has seen the Government provide more than £8.9billion of support, with the scheme extended to last until 2021 and an additional £10 billion pledged.
  • Recent research suggests that the scheme – which was implemented primarily to help first-time buyers – is pushing up house prices and only helping wealthy people to move up the housing ladder. It is claimed that a fifth of households have used the scheme to upgrade their homes and that it has been used by a significant proportion of high income households.

The proposed review by Ministers comes as the government faces mounting pressure from mortgage lenders and property developers to announce plans to finance the policy beyond 2021, when the current tranche of funding runs out

Henry Knight, Managing Director of Springtide Capital comments ‘Help to Buy is invaluable in London, where buyers need even more support to get onto the property ladder than in other areas of the country due to the more expensive London property market. It is key that the government move quickly in any review process that is put in place’

Sources:

https://www.ukfinance.org.uk/household-finance-update-july-2018/

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2018

https://static.halifax.co.uk/assets/pdf/mortgages/pdf/July-2018-House-Price-

Index.pdf

https://www.ukfinance.org.uk/london-remortgaging-activity-reaches-nine-year-high-as-house-purchase-activity-slows/

http://www.thisismoney.co.uk/news/article-6122977/Ministers-fear-Help-Buy-scheme-pushing-house-prices.html