Tag Archives: investment
Mortgage approvals increased in UK in May but still below six month average
The number of mortgages approved for buyers in the UK increased in May compared to the previous month but are still below the high level recorded in March due to stamp duty changes. The data from the Bank of England’s Money and Credit Report shows that there were 70,553 approvals for house purchases in March, 66,205 in April and 67,042 in May. This compares to an average of 70,598 over the previous six months. The data also shows that the number of approvals for remortgaging was 42,919, compared to the average of 41,019 over the previous six months. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), stamp duty changes for buy to let properties and second homes meant there was an air of inevitability about the April dip in mortgage approvals, which has now been followed up by a modest recovery in the lead-up to the UK’s referendum on its European Union membership. ‘House purchase activity hasn’t quite returned to the heightened levels of early 2016, but the homebuyer market has visibly strengthened over the last 18 months. The data also shows record remortgage activity with almost 43,000 approvals in May, the highest of the post-Mortgage Market Review (MMR) era,’ he said. ‘A resurgence in remortgaging has been underway for the last six months, with more than 40,000 loans approved every month since December. It reflects growing opportunity for consumers to use the equity in their homes to switch to a new deal, and growing awareness of the savings on offer while rates are low and lender competition is high,’ he pointed out. Williams also explained that a year ago, the UK mortgage market was about to experience a post-election bounce and it seems unlikely that last week’s EU referendum result will produce a similar effect this time round. ‘However, despite inevitable uncertainty as some buyers and sellers wait to see how the dust settles, lenders will be maintaining business as usual. Mortgage rates continue to look attractive and the housing supply shortage means homes appearing on the market are still likely to be subject to considerable demand,’ he added. David Whittaker, managing director of Mortgages for Business, explained that investors’ desire to complete before the 01 April deadline meant that business was brought forward into February and March, which then resulted in dampened approval figures for April. ‘However, following this, it is now clear that the number of purchase approvals did increase between April and May, as property investors came to terms with the new normal this tax year,’ he said. ‘May feels like an age ago. Now, there is little doubt that the rest of the year will be dominated by the events of the last seven days. Following the Brexit vote, anecdotal evidence suggests that many are holding off on transactions until a more detailed picture of the economic and political fallout emerges. This could make for a quieter third quarter,’… Continue reading
Warning over implications of changes in Renters’ Rights Bill in UK
The Association of Independent Inventory Clerks (AIIC) is urging the Government to re-evaluate its Renters' Rights Bill, which includes measures to stop letting agents charging tenants for an inventory check. The industry body says that these costs will simply be passed to landlords who will then incorporate them into tenants' rent. Earlier this month, the Renters' Rights Bill, which also includes measures to ban agents charging tenants registration fees, admin fees, reference check fees, renewal fees and exit fees, was given an unopposed second reading in the House of Lords. The Private Members' Bill was set up by Baroness Grender and has received strong support from Labour and the Liberal Democrats and it is thought the Bill has a strong chance of success as it now runs alongside a petition against agent fees charged to tenants, which has been gaining support since March and has now received well in excess of 250,000 signatures. ‘Here at the Association of Independent Inventory Clerks, we're strongly opposed to the banning of inventory fees charged to tenants by letting agents,’ said Patricia Barber, chair of the AIIC. ‘We envisage that if banned these charges would continue to be charged to tenants through the unspecified and unclear means of a higher rent,’ she explained, adding that not being able to charge tenants a fee may encourage some letting agents to bypass inventories altogether, something which could be extremely costly for all parties involved. ‘A detailed inventory helps landlords, agents and tenants to determine exactly how the property's condition has changed over the course of the tenancy, what can be deemed fair wear and tear and what needs to be replaced and therefore deducted from the tenant's deposit,’ Barber pointed out. ‘We totally understand that some fees charged to tenants are too high and complicated, but we believe that if fair and worthwhile fees like inventory checks are made clear to the tenant then there should be no problem in them being charged,’ she said. ‘The vast majority of letting agents are transparent in the fees they charge to tenants. Banning fees altogether and particularly inventory check fees is certainly not the answer and could contribute to more deposit disputes and property damage further down the line,’ she added. She also pointed out that the Renters' Rights Bill remains some way off becoming law as it still has to pass through the House of Commons before receiving Royal Assent. Its next stage is the Committee stage in the House of Lords, a date for which is yet to be announced. The AIIC is the UK's largest membership organisation for independent clerks and recently announced that it has joined the Property Redress Scheme. Continue reading
UK monthly property price growth slowed to 0.2% in May, activity expected to slow further
Residential property prices in the UK edged upwards by just 0.2% in May in the run up to the historic vote on the future of the country in the European Union, according to the latest index. This meant that annual price growth slowed to 4.7%, taking the average price to £204,368, but activity in the market is expected to slow in the coming months due to a spike in March due to stamp duty changes and now the Brexit vote. Robert Gardner, Nationwide's chief economist, pointed out that the annual pace of house price growth remains in the fairly narrow range between 3% and 5% that has been prevailing for much of the past 12 months. ‘In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 01 April,’ he said. ‘Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities,’ he explained. He also pointed out that while cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy to let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion. The number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March. ‘House purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. The recovery thereafter may also be fairly gradual, especially in the buy to let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag,’ said Gardner. ‘Nevertheless, healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track,’ he added. ‘However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he added. Gardner also explained that it is difficult to gauge how sentiment from overseas buyers will be impacted by increased economic uncertainty caused by Brexit on the one hand and the sharp decline in Sterling on the other, which, if sustained, reduces the cost of UK property in foreign currency terms. He pointed out that property prices in London have been supported by extremely robust labour market conditions as well as strong investor demand in recent years. Indeed, the price of a typical London property… Continue reading
