Tag Archives: financial
Major UK parties put housing at top of election agenda
Housing has become one of the major issues in the UK’s forthcoming general election with all the major parties making pledges to attract voters. The Conservative party said it will extend the Right to Buy scheme and the Liberal Democrats have announced plans to build 300,000 more homes a year and ensure everyone has a decent place to live. The Labour party says it will build at least 200,000 new homes a year by 2020 with first priority for local first time buyers and introduce three year housing tenancies with a ceiling on excessive rent rises. Prime Minister David Cameron said that the £18billion extension of Margaret Thatcher's Right to Buy scheme will be extended to 1.3million families living in housing association properties. It would be funded by requiring councils to sell off the most expensive social housing when it becomes vacant, replacing it on a one to one basis with more affordable property. The existing Right to Buy allows tenants living in council owned properties local authority tenants to buy houses and flats at a discount of as much as 70% up to a maximum of £102,700 in London and £77,000 across the rest of England. Around 500,000 housing association tenants currently have no purchase rights and 800,000 who qualify only for much less generous discounts of £16,000 or less. But the reaction has been mixed. The Conservative plans will not necessarily boost house building and could weaken the future capacity of the social renting sector to provide a safety net for those who cannot afford to house themselves via the private market, according to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA). ‘The risk is that in this manifesto along with others we will get more short term initiatives and that politicians will continue to avoid owning up to the need for a fully formed housing strategy that balances support for people across all forms of housing tenure. Delaying the inevitable will only result in more difficulties in the long term,’ he explained. Adam Challis, head of residential research at JLL, described as good politics, but terrible policy. ‘This is exactly the kind of short termist thinking that the countries' 4.7 million households in social housing don’t need, not to mention the same number again of aspiring owners in private renting,’ he said. ‘Right to Buy benefits a select few while condemning the vast majority to longer waiting lists and fewer choices. At a time when we are building barely half the homes this country needs, we need a government that is interested in genuine solutions to the housing crisis rather than cheap vote winners,’ he added. Colleague Richard Petty, head of affordable housing at JLL, said that extending the Right to Buy to housing associations will seriously damage their ability to help the country build its way out of the housing crisis. ‘They rely on private finance to build now, not government grant. The… Continue reading
Home lending falls in UK month on month and year on year, latest CML data shows
Lending to home owners in the UK fell in February compared to the previous month and compared to February 2014, the latest data from the Council of Mortgage Lenders shows. The number of loans advanced totalled 40,600, down 1% on January and 16% compared to the same month in 2014. These loans totalled £6.8 billion, which was down 3% on January and 13% on February last year. Lending to first time buyers was down 1% month on month and 16% compared to February 2014 with just 18,700 totalling £2.7 billion, which was down 4% on January and 13% down on February last year. Home movers were advanced 21,900 loans, a decline of 2% compared to January and 16% down year on year. These loans totalled in value £4.1 billion, 2% down on January and 13% down compared to February 2014. Remortgage lending also decreased month on month with 21,500 loans advanced, down 16% on January and 14% down on February 2014. The value of these loans at £3.3 billion also decreased month on month by 20% and was down 11% year on year compared to February 2014. Even the buy to let sector, considered to be buoyant at present declined. There were 15,900 buy to let loans in February, down 13% on the previous month but up 11% on the same period in 2014. These loans came to £2.2 billion in value, down 12% compared to January but up 16% on February 2014. Paul Smee, director general of the CML, blamed seasonal factors for dampening house purchase lending activity in February but admitted the general election could be making people wait and see. ‘This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months. Buy to let, in contrast, has shown year in year lending increases, due almost completely to remortgaging which is typically strong in the buy to let market. Karen Bennett, sales and marketing director of commercial mortgages at Shawbrook Bank agreed that there could be a general election effect with the forthcoming poll creating a feeling of uncertainty combined with the continued impact of tighter lending criteria on owner occupiers. ‘As part of this, we are seeing the more specialist buy to let market stabilising, with less rapid, but still robust, growth than in previous years. As professional investors continue to expand their portfolios and add value by refurbishing or renovating, the signs are there for a continuing strong mortgage market. In order to ensure market sustainability, brokers should always encourage responsible borrowing by clients,’ she added. Continue reading
London emerging prime property proves robust ahead of election
Prices in emerging prime property areas in South West London have remained robust in the first quarter of 2015 despite the uncertainties presented by the election, according to a new index. The top performers in terms of capital growth in the first three months of 2015 was Clapham, up 5.5% after a weaker fourth quarter in 2014, followed by Southfields and Earlsfield, up 2.9% compared to last quarter. The emerging prime index from Douglas & Gordon also shows that investors have been attracted by the strong rental growth and some areas have become hotspots for young professionals and overseas investors and tenants who are drawn to upmarket developments. Investors are continuing to flock to smaller units, particularly flats, and this is due to attractive prices and high yields of 3.7% to 5% compared to 2.2% and 3.7% in prime areas. The index report points out that the Chancellor of the Exchequer’s clear signal in the Autumn Statement that properties under £900,000 would be free of political interference has meant that demand for properties under this threshold has remained strong. When it comes to properties over £2 million there has been little pick up from the second half of 2014 and the report says this is due to the fallout from the overhaul in stamp duty structure announced last year and uncertainties ahead of the election, particularly the potential introduction of a mansion tax if certain political parties come to power. Properties in Putney and Battersea, which saw spectacular growth in 2013 and 2014 thanks to well-heeled families seeking family houses, saw a standstill in prices in the first quarter of 2015. The report says this is because property prices in these areas, which generally have more large properties than flats, are now approaching the politically sensitive £2 million barrier, which is the threshold for the mansion tax if introduced. ‘This quarter’s index confirms that emerging prime has become the sweet spot of the professional private rental sector. One bed flats in the £300,000 price range are one of the best investments, given their protection from political interference and the demand from young professionals who increasingly feel more at home in places like Clapham than Central London,’ said the firm’s executive director Ed Mead. ‘It is very telling that for many buyers, both domestic and overseas, emerging prime areas are achieving a social cachet they’ve have never had. While the pre-election period is causing capital growth of larger properties to pause, we still think there is still some way to go on value,’ he pointed out. ‘For instance in Clapham we see demand continuing in the long term given the amount of undeveloped stock in the area. We anticipate the upward trend in prices to be reinstated if no mansion tax is introduced,’ he added. Continue reading
