Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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We are addicted to property
Ever since Margaret Thatcher declared her belief in a ‘property-owning democracy’ and introduced Right to Buy in 1980, the UK was converted into a nation obsessed with residential properties. Let’s be honest, many of us are preoccupied with our homes and particularly how much they are worth. Just turn on the TV or pick up a newspaper on almost any given day and you will find a story about property prices or mortgages and how they are becoming easier or harder to obtain. A new survey by Direct Line Home Insurance shows that 63 per cent of Britons browse property websites even when they are not looking to buy. Some 2.6 million browse portals like Zoopla or Rightmove at least once a day and 38 per cent admit they checked the price of someone else’s home online in the last year. The most enthusiastic property browsers were in Sheffield where 74 per cent confessed to window shopping for homes followed by 72 per cent in London and 70 per cent in Newcastle. People say that they look at online property portals to keep a check on house prices, look at design trends and also daydream about a future home. “We…
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Chancellor’s assault on buy-to-let “is mystifying”
The Chancellor George Osborne has been slammed for his outright assault on buy-to-let investors following the introduction of a stamp duty surcharge last week, while also exempting landlords from fresh cuts to Capital Gains Tax, and planning further tax increases on property investors. The former Editor of The Times and the London Evening Standard, Simon Jenkins (left), questioned in his latest column for The Guardian columnist whether George Osborne was really a Tory. He also described Osborne’s “assault” on buy-to-let as “mystifying”. He wrote, “With the withering away of public housing, private renting is how evermore people live, especially in cities. They include the migratory rich, millennials, those unable to afford a house and those who are just very poor and cannot get a council tenancy. Between 2001 and 2011, private renting in London went from 17 per cent to 26 per cent of the housing market, and is continuing to rise.” Jenkins believes that encouraging the release of under-occupied space is the one sure answer to the housing shortage, and the most efficient way of doing this is by encouraging letting, especially in London. “Renting is the most efficient use of urban property. It keeps things flexible. It is…
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Investors hung out to dry as BoE gets tough
The Bank of England has announced plans to introduce more stringent checks on buy-to-let lenders amid concerns that the property investment market is moving into bubble territory. The Bank’s Prudential Regulation Authority said it was putting in place a “guardrail” to prevent banks from making risky loans, warning that 20 per cent of lenders were not carrying out the necessary checks. The main concern is that a bubble in the buy-to-let market could cause a wider housing market slowdown, which would be bad news for millions of people who have invested in property, as part of their retirement. More than 1.7 million properties have buy-to-let mortgages, which represented 17 per cent of loans used to acquire residential properties last year. “You might form expectations about what the necessary long-term saving to support your retirement will be, which can then (if house prices fall) be transformed quite suddenly in ways that, frankly, are unwelcome,” Bailey said. Andrew Bailey (left), who currently heads up the Prudential Regulation Authority, told the press that the Bank of England has “nothing against” buy-to-let landlords, but believes that new restrictions on mortgages for buy-to-let investors will help reduce the risk of “very volatile boom and bust…
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Right to Buy worsens housing crisis
The Government’s commitment to build a replacement for every social rented home sold through the Right to Buy scheme is not being fulfilled, new figures show. The latest published data from the DCLG reveal that almost 50,000 council owned properties have been acquired by tenants in the UK since the Government’s Right to Buy programme was relaunched in 2012, but the Government is failing to meet a pledge for a one for one replacement of homes sold off from under the scheme. Local authorities in England have replaced just one in 10 of the homes sold through Right to Buy since discounts were increase four years ago. Official figures reveal that there have been 49,573 sales since the scheme was reinvigorated, but only 4,594 homes have been started onsite or acquired by councils. An estimated 3,250 homes were acquired by tenants in Q4 2015, up from the 2,941 during the previous quarter, while only 396 homes were started onsite or acquired by local authorities during the same three-month period. Council tenants can currently get discounts of up to £77,900, rising to £103,900 in London, under the existing Right o Buy initiative. More than 2 million council homes have been purchased…
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Rush to purchase buy-to-lets before SDLT surcharge
Estate agents report that there has been a significant increase in the number of buy-to-let investors attempting to push sales through before this Friday’s stamp duty deadline. Landlord investors are naturally keen to beat the 1st April deadline, after which they will pay an additional 3 per cent above existing stamp duty rates on buying a buy-to-let property. Some 85 per cent of estate agents reported an increase in the number of buy-to-let investors looking beat the stamp duty changes on second homes in February as demand for housing hit a 12-year high, with an average 463 house hunters registered per member branch, according to the NAEA. Mark Hayward, Managing Director of the NAEA, commented, “It is evident from February’s report findings that we’ve seen a real sense of urgency from landlords trying to complete on sales ahead of the stamp duty reforms. However, the mounting pressure and increased demand for housing has meant that first time buyers have had to compete with landlords for property and as a result they have lost out.” Many housing market analysts expect the new buy-to-let tax measures to dampen demand for buy-to-let investments in the near term, while there is every chance that…
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Bank of England to consult on buy-to-let ‘prudence’
The Bank of England has published a consultation paper (CP) which seeks views on its proposals which could result in strict limitations for buy-to-let mortgages. David Smith (left), the Residential Landlords Association’s Policy Director said, “The Bank needs to be careful that it does not over-react to the current surge in buy to let applications which are aiming to beat the tax increases coming in April. ‘These include a three percentage points extra levy on stamp duty and abolition of mortgage interest relief. It is likely that the impact of these will significantly reduce the demand for borrowing. “We would urge the Bank to tread carefully and avoid any premature moves that could stifle the supply of the 1 million rental properties the country desperately needs.” The consultation paper says: Underwriting standards for buy-to-let mortgage contracts – CP11/16 Background This consultation paper (CP) seeks views on a supervisory statement which sets out the Prudential Regulation Authority’s (PRA’s) proposals regarding its expectations of minimum standards that firms should meet when underwriting buy-to-let mortgage contracts. The proposals also include clarification regarding application of the small and medium enterprises (SME) supporting factor on buy-to-let mortgages. Summary of proposals The proposals seek to ensure…
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Scottish house sales hit 8-year high
Residential property sales in Scotland reached the highest level for eight years in January, as buyers rushed to avoid an LBTT surcharge, the latest Scotland House Price Index from Your Move reveals. Home sales in the first month of 2016 rose by 24 per cent year-on-year with the biggest surge witnessed in Midlothian with a rise of 38 per cent, according to the data. The hike in property sales helped to push up property prices by an average of 0.8 per cent, or £1,346, in January to £171, 079, up from 0.3 per cent the previous month, led by gains in Stirling where property values leapt by 13.5 per cent over the 12 months. The only areas in Scotland that saw a decline in sales from November to January, compared to the previous three months, were Aberdeen City and Aberdeenshire. In Aberdeen City sales fell by 11 per cent during this time period, partly due to the oil crisis and the large proportion of expensive homes in city which are hit hardest by the LBBT. Christine Campbell, Your Move Managing Director in Scotland, said that the Scottish housing market had easily outpaced property sales south of the border, as England…
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Rents rise 3.2% year-on-year
Rents rose by 3.2 per cent to an average £926 per month in February compared to the same time last year, the latest figures show. The Countrywide monthly Lettings Index for February has identified a fall in tenants’ negotiating power, with the average home in the UK let for 99.9 per cent of the asking rent, the highest such value since 2007, just before the global economic downturn. This figure is highest in London where the average let was agreed at 100.9 per cent of the asking price while it was lowest in Wales at 98.7 per cent. With demand continuing to heavily outstrip the supply of private rental homes, one in five of those renting in the capital pay more than asked for to secure a property of their choice. This equates to £94 a month over and above the asking rent against a UK average of £44 which, over the course of a typical 17-month tenancy, works out to be an additional £1,578 in rent for the average Londoner. Rental price growth in London has unsurprisingly outstripped all other parts of the country since 2007, with rents 34 per cent above their pre-recession record compared to12 per cent…
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Property transactions increase 9.7 per cent
The number of UK residential property transactions rose by 9.7 per cent year-on-year in January, fresh figures from HMRC shows. Last month there were 105,940 residential property transactions, which although on a seasonally adjusted basis dropped 2.8 per cent month-on-month, was notably higher than the same month last year, a sign that while there remains much uncertainty due to existing global economic conditions, the market is now in a much healthier position than in January 2015. “Strong market conditions prompted a solid annual increase in the number of residential transactions this January, despite the typical monthly fall from December as activity from buyers and sellers tapered off after the end of the year,” said Brian Murphy at MAB. Andy Sommerville (left), Director of Search Acumen, like many housing commentators, expects to see transactions rise further before April, as the market braces itself for a “buy-to-let surge” ahead of changes to stamp duty. “The full picture of the Government’s intervention into buy to let is likely to reveal itself at the end of the first quarter,” he said. “While lack of affordability and housing supply remain a key issue, this month-on-month dip should be seen in the wider context of uncertainty…
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Fall in English home ownership halted
The decline in home ownership recorded over the past decade in England ground to a halt last year, the latest figures show. The data from the 2014/15 English Housing Survey reveals that 5,000 more people were home owners than in the previous year – the first increase since 2005. The rise in the proportion of home owners rose from 63.3 per cent to 63.6 per cent of the total is the first increase since 2002, taking the total to 14.3 million. By contrast the number of people living in private rental accommodation dropped to 4.3 million, the first decline in 17 years. But the short term trends shown in the latest English Housing Survey need to be treated with caution, given that the reported fall in private renting in 2014-15 follows a particularly large increase in the preceding year, according to Lucian Cook (left), head of Savills UK residential research. “Behind the short term volatility, levels of private renting among under 35s are still up by over 1 million in the past decade,” he said. Nevertheless, the Housing Minister Brandon Lewis (right) insists that the figures are still a clear sign that housing market conditions are improving. He commented, “In…
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