Tag Archives: middle-east
UK sees sharp expected drop in home lending in April
Lending for home purchases fell by 40% in April compared with the previous month but experts point out this was a blip due to an unusually high level of borrowing in March ahead of stamp duty change. Home owners borrowed £8.1 billion, down 4% compared to a year ago and took out 47,300 loans, down 31% on March and 5% on April 2015, according to the latest figures from the Council of Mortgage Lenders. First time buyers borrowed £3.9 billion, down 11% on March but up 15% on April last year. This equated to 25,100 loans, down 9% month on month but up 7% year on year. Home movers borrowed £4.3 billion, down 53% on March and 14% compared to a year ago. This represented 22,200 loans, down 46% month on month and 15% on April 2015. Remortgage activity totalled £6 billion, up 25% on March and 40% compared to a year ago. This came to 34,800 loans, up 23% month on month and 30% compared to a year ago. Landlords borrowed £2.5 billion, down 65% month on month and 7% year on year. This came to 16,100 loans in total, down 64% compared to March and down 10% compared to April 2015. Paul Smee, director general of the CML, pointed out that it was not a surprise that lending eased back following the significant rises in activity in March as borrowers looked to beat the second home property stamp duty deadline. ‘We expect the market to take several months to return to its previous levels after the lending surge,’ he added. According to Andy Knee, chief executive of LMS, remortgaging is driving growth in the home loan market. He pointed out that not only were the number of remortgage loans up by almost a third from the year before but it was the greatest number of people remortgaging since July 2009. ‘It’s great to see home owners taking advantage of the favourable environment for remortgaging. Record low interest rates have improved affordability and home owners are sitting on huge amounts of housing equity that they may have been wary of capitalising on previously. The Government is also consulting on seven day switching for faster transactions, the ease of which could drive the incentive for borrowers to revisit their mortgage faster,’ he pointed out. He also pointed out that with prices continuing to rise first time buyers still remain disadvantaged. ‘There are signs of encouragement in the first time buyer market, such as a greater range of high loan-to-value products, but we’ll have to wait patiently for the year to unfold to be able to gauge the impact of this on the market,’ he added. However, Patrick Bamford, business development director for AmTrust Mortgage Insurance, believes that continued low interest rates and a plethora of products mean mortgages are getting cheaper for first time buyers who are spending less of their income servicing their debt. He explained that there was… Continue reading
Tax change boosts home sales in Scotland
Property tax change had boosted Scottish home sales with a rise in transactions of 11% year on year but prices are down 7.8% compared to 12 months ago, the latest index shows. The index report from estate agents Your Move suggests that prices are down due to a lack of higher value homes on the market with the average house price now £170,667. Prices have increased in Edinburgh and Clackmannanshire but have fallen in the majority of areas throughout Scotland. The index also shows that month on month prices are unchanged despite the new 3% surcharge on additional home sales. ‘After a year of the Land and Buildings Transaction Tax (LBTT), it’s now possible to see its impact across the Scottish housing market. By cutting the cost of purchasing cheaper homes, LBTT has led to an 11% increase in sales over the last year,’ said Christine Campbell, Your Move managing director in Scotland. She pointed out that with 104,344 home sales in the last 12 months, the market has outdone the previous year’s 93,601 sales. ‘These figures confirm that lower purchase taxes for property can significantly boost activity in the housing market, while also making it more affordable for first time buyers to get a foot on the ladder,’ Campbell explained. Indeed, she believes that the Scottish Government should consider lifting the LBTT bands higher, if they want to build on the foundations of this policy, in order to support Scotland’s fragile property and construction sector. She also pointed out that the drop in property values was caused by a spike in high value home sales last year, before the LBTT was introduced, but today’s market hasn’t regained those losses yet. ‘The facts show that since the introduction of LBTT, growth in house prices has been subdued. The average property value in Scotland has only grown 1.74% in the last six months, compared to 3.19% for England and Wales over the same period,’ Campbell explained. ‘The tax has particularly hit homes at the top of the market, as these properties have become more expensive to buy after the introduction of LBTT. So while there has been an upswing in sales, it has come at a cost for some,’ she added. And she said that while sales in March were almost double those in February, sales in April are 66% down on the previous month. However, home sales for the first four months of the year are still well ahead on the same point in 2015, with 4,751 additional property purchases so far in 2016. However, when you look at the local picture, the negative effects of the new surcharge are more obvious, as average house prices have dropped in 20 of Scotland’s 32 local authority areas from the previous month. Moray has felt the worst of the tax hike in April, with property values in the area declining by 4.6% month on month. Edinburgh has seen house prices rise by… Continue reading
Fewer arrears for tenants in UK as jobs market improves
Fewer tenants in the UK are falling into serious rent arrears thanks to the improving employment market and landlords are benefitting from healthier tenant finances, according to the latest lettings agents report. In absolute terms, just 86,200 tenants across the UK are more than two months behind in their rent in the first quarter of 2016 compared to 89,300 in the previous quarter, a fall of 4%. The data from the report from Your Move and Reeds Rains also shows that just 1% face serious arrears and for landlords there are the fewest buy to let mortgage arrears since 2007. Since 2008, there have been on average 92,600 tenants in serious arrears in the first quarter of each year meaning that the first quarter of 2016 is also substantially lower than the long term average. ‘Fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. He explained that serious rent arrears peaked in the third quarter of 2012 when 124,800 households owed more than two months’ rent and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course. The direction of travel looks very positive. ‘A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no one should be complacent as managing a property is never simple. Some landlords are being held back from buying property by the Stamp Duty Surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents and hitting affordability,’ Gill pointed out. The number of tenants more than two months behind with rent has fallen by 16% since the eve of the financial crisis and recession in the second quarter of 2008 from 102,900 to today’s total of 86,200. This is despite the expansion, over exactly the same period. At the start of this period, there were 3.6 million households living in the UK private rented sector. Now, after just eight years, this has grown by 62% to reach a total of 5.8 million households as of the first quarter of 2016. ‘The massive growth in the number of homes available to rent, driven by both deliberate landlords and accidental landlords coming into the market, has ensured that rents have not outpaced the ability of tenants to pay. The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of… Continue reading
