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Small developers could be hindered by UK court ruling on affordable homes
The UK courts have delivered a blow to small residential developers, potentially making schemes of up to 10 homes economically unviable, according to legal experts. The decision, which concerns the exemption small residential developers have previously had from contributions towards affordable housing, will particularly affect urban residential development and small rural sites, according to law firm Coffin Mew. The exemption was introduced by the government to encourage residential developers to bring forward smaller housing schemes and to redevelop compact urban and rural spaces to help meet the chronic housing shortage. However, two local authorities, Reading and West Berkshire, have successfully challenged this exemption, arguing that it would have a negative effect on affordable housing numbers. ‘This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments,’ said Nick Leavey, partner and head of commercial property at law firm Coffin Mew. ‘The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites. It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further. Nobody wins from this decision,’ he added. Meanwhile, real estate industry in the UK has seen an 11% growth in jobs due to the recovery in the property market. Jobsite Indeed research found that opportunities for trainee estate agents, quantity surveyors and property managers are among the top five. London, Manchester and Birmingham top the list for vacancies. Also, the number of people actively looking for careers in this industry has increased 10% since 2014, which the firm says suggests that job seekers are starting to realise the potential within this market. ‘The return of positive conditions in the UK housing market for both buyers and sellers, suggest it’s prime time for job seekers in this sector to take advantage of such opportunities,’ said Gerard Murnaghan, Indeed’s vice president for the EMEA region. Continue reading
Large group of UK first home owners can’t afford to move up the housing ladder
Over four million young home owners in the UK are frustrated middle movers who cannot afford to move up the property ladder, new research reveals. Some 68% of home owners aged 18 to 34 are still in their first property and 63% said that the main barrier is the need for property prices at the lower end of the market to increase so that they can afford a bigger home. The research from Santander Mortgages also shows that 89% have made compromises on their first home such as location or size, at 63% and 55% respectively. Some 47% bought a home with fewer bedrooms that they would have liked. Of the home owners aged 18 to 34 who would like to buy their next home within the coming 24 months some 71% think it is unrealistic that they will be able to do so. Overall 50% of home owners in this age group expected to live in their first property for more than five years, but 59% have already had to do so. ‘There are a lot of frustrated middle movers who made compromises on their first homes and have now been stuck with these for longer than they wanted, as they are finding it difficult to move up the property ladder,’ said Miguel Sard, head of mortgages at Santander. ‘There are a lot of great deals to be had for buyers at the moment, however, both in terms of properties and mortgages, so it’s worth looking around,’ he added. Of those homeowners aged 18 to 34 who would like to purchase a new home in the next two years, the average time they think they will realistically have to wait until they can do so is over three years, the research also found. Whilst the main barrier is the need for property prices to increase, as cited by 63% of those surveyed, 28% blame a lack of suitable properties on the market and 51% say they need to do work on their current home to increase its value before putting it on the market while 34% say they are waiting for property prices to fall further. Others see wider economic issues as barriers to purchasing a new home, with 53% citing personal fears about the state of the economy as an obstacle, while 38% are concerned about the stability of their own or their partner’s job. Upfront costs are also a big issue, with 58% saying they need to save for a bigger deposit. Continue reading
Survey confirms certain groups facing difficulties due to UK mortgage reforms
Mortgage Market Reforms (MMR) in the UK are making it more difficult for certain customers to get a mortgage including over 40s and the self-employed, new research has confirmed. When the rules changed in April there were warnings that they could impact adversely on the home lending market and now research from buy to let lender Paragon Mortgages shows there was a 3% reduction in average mortgages introduced by intermediaries in the third quarter of the year. Intermediaries thought it was more difficult for certain customer groups to get a mortgage in the third quarter compared to the previous quarter and this comes after other firms have reported difficulties for people aged over 40 trying to secure a mortgage. The specialist lender’s quarterly Financial Advisers Confidence Tracking (FACT) survey highlights intermediaries’ views on the performance of the mortgage market, also revealed that people borrowing into retirement, people wanting interest only mortgages and people with irregular incomes have experienced difficulties. Indeed, the stark figures show that more than 90% of the 186 respondents in each case reported these difficulties. During the third quarter the average number of mortgages introduced by intermediaries was 22, which was down 3% on the second quarter. Nevertheless, compared with the third quarter of 2013, this shows a 12% increase in the average number of mortgages introduced. This, however, was significantly lower than the 30% year on year increase seen in the second quarter. Intermediaries appeared more positive about the buy to let market with 24% of all mortgages introduced being buy to let mortgages, a modest increase from 23% in the second quarter of the year. In particular, 43% of intermediaries surveyed thought the availability of buy to let finance had improved since the second quarter, a significant increase of 7% over the period from 36%. In addition, only 8% of intermediaries stated the availability of buy to let finance had deteriorated, compared with 12% in the previous quarter. ‘The market has seen significant structural changes following the Mortgage Market Review. This is a result of both the regulations themselves and the way the lending industry has responded to them,’ said John Heron, managing director of Paragon Mortgages. ‘This could be one factor behind the softer levels of business that intermediaries are reporting in the third quarter. Indeed CML data shows us that buy to let lending was up 14% in quarter three compared with quarter two, and up 24% on the third quarter of 2013, which could suggest that the buy to let market is proportionally more important for lenders in the current market,’ he explained. ‘A healthy availability of buy to let finance is significant to maintaining a competitive and high quality Private Rented Sector, so it is pleasing to see increased confidence amongst intermediaries, for this type of business,’ he added. Continue reading
