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Buy to let lending grew in 2015 at expense of first time buyers
The rapid growth of the buy to let market in the UK during 2015 was at the expense of first time buyers despite Government initiatives to encourage home ownership, new research has found. The proportion of buy to let mortgage enquiries grew by 4.4% to 18.2% during 2015 compared with 2014, whereas the proportion of enquiries for first time buyers fell by 3.7% to 23.5%. According to price comparison website comparethemarket.com the inverse correlation indicates that the buy to let market has gained a chokehold over first time buyers, as many struggle to get out of rented accommodation and on to the housing ladder. January showed no signs of a reducing market, as the first month in 2016 showed year on year growth of over 16% and 62% increase compared to December, reinforcing the sentiment that the current buy to let market may be unsustainable. Evidence indicates that if the market continues in its current direction, the number of enquiries for buy to let mortgages will outstrip the number for first time buyer enquiries, which would be a blow to the Government’s home ownership drive. Overall the buy to let market saw growth during of over 23% in enquiries on the website in 2015 and the initial cut on tax relief also did little to reduce the swelling of the buy to let market as enquiries rose by 14% in the three months after the announcement made by the Chancellor at the Summer Budget, compared to the three months before. However, with the new stamp duty on buy-to-let properties, announced at the Autumn Statement, coming into effect this spring, many expect the market will finally dampen. Elsewhere, January proved to be a particularly buoyant month for the mortgage market as the number of enquiries rose by more than 8% compared to 2015. It seems that January is the time that consumers get their respective houses in order with a recent study by comparethemarket.com finding that 44% of consumers used the month to ‘sort out’ their finances. ‘The buy to let market has been subject to both extensive discussion and criticism over the past year with even the Bank of England’s Financial Policy Committee labelling it a risk to the UK’s financial stability,’ said Jody Baker, head of money for comparethemarket. ‘This data only reinforces the view that over the past year, families and others looking to get a foot on the housing ladder are being priced out by landlords. It was great to see the Government take action in the Autumn Statement but time will tell as to what the material impact will be on the market after 01 April,’ Baker added. Continue reading
Pilot programme underway in UK for new homes on derelict and underused land
Pioneering councils are to help lead the way in bringing forward derelict and underused land for new homes in the UK, it has been announced. Some 73 councils across England will pilot one of the new brownfield registers, which will provide house builders with up to date and publicly available information on all brownfield sites available for housing locally. According to Communities Secretary Greg Clark the registers will help house builders identify suitable sites quickly, speeding up the construction of new homes and they will also allow communities to draw attention to local sites for listing, including in some cases derelict buildings and eyesores that are primed for redevelopment and that could attract investment to the area. The government has pledged one million more homes and to get planning permission in place on 90% of suitable brownfield sites for housing. This move ramps up the brownfield land building commitment. ‘A key part of our ambition to build a million homes is to get work started on brownfield sites across the country, many of which are currently nothing more than blight on a community’s landscape,’ said Clark. ‘These councils will be at the forefront of these efforts to list land and encourage builders to deliver new homes for aspiring home owners. But this is just the first step and I would urge councils to continue to offer up brownfield sites to deliver the homes their residents want and need,’ he added. Housing Minister Brandon Lewis explained that the councils taking part in the brownfield pilots will inform future government policy and guidance on the operation of the brownfield registers. ‘Registers will eventually become mandatory for all councils under proposals going through Parliament in the Housing and Planning Bill,’ he said, adding that other measures in the Housing and Planning Bill will enable ‘permission in principle’ to be granted for housing led development sites listed on the new brownfield registers. ‘This will mean developers building new homes on brownfield land will have a greater degree of certainty in relation to location, use and the amount of development,’ he explained. Each council agreeing to be part of the pilot project will receive £10,000 government funding to help the establishment of their brownfield registers. The 15 councils with the most brownfield land taking part in the brownfield register pilot project are: Cherwell, County Durham, Huntingdonshire, Leeds, Liverpool, Manchester, Medway, Newcastle upon Tyne, Peterborough, Selby, Sheffield, South Cambridgeshire, Sunderland, Tonbridge and Malling and Wigan. These have the most brownfield land in England, as identified in the final complete publication of National Land Use Database statistics. A further 36 areas made up of 58 councils (some bids are joint) were selected on a competitive basis. Continue reading
New tenancy rental rates continue to rise across most of UK
The cost of taking on a new tenancy in the private rentals market continues to rise, with the average rental agreement signed in the UK outside of London during the three months to February 2016 costing 4.8% more than in the same period a year ago. The latest data from the HomeLet Rental Index also shows that while that rate of appreciation was down on the 5.5% seen over the three months to January, rents on new tenancies continue to rise much more quickly than inflation in most parts of the country. Year on year Greater London, the East Midlands and the South East of England recorded the fastest rent rises, up 7.7%, 6.7% and 6.5% respectively while rents fell by 2.6% in the North East and by 3.2% in the North West. The rise take the average rent for new tenancies in the UK, excluding Greater London, to £744 per month. In Greater London it is £1,521 but the increase remains below the double digit increases seen last year. The Index shows rents on new tenancies rose in 10 out of 12 regions in the UK on an annual basis over the three months to February 2016. The exceptions were the North West of England, where rents dipped by 3.2% from £657 per month last year to £636 per month, and the North East of England, where rents now stand at £519 per month, 2.6% lower than a year ago. In Scotland rents were up 3.9% year on year and 1% month on month to an average of £649 while in Wales they were up 3.4% year on year and 02% month on month to £596 on average. HomeLet’s research also shows that as rents have risen in recent years, the number of new tenancies signed by a single tenant has fallen. Last year, single tenants accounted for just 33% of new tenancies on rental properties, down from 67% in 2008. By contrast, the proportion of new tenancies signed by two tenants rose from 28% to 52% over the same period. New tenancies signed by three or more tenants have risen from 5% to 15% of the market. The firm says that this trend may in part reflect the increasing number of families moving into the private rental sector as house prices have become less affordable and as people have pursued greater flexibility. The latest data from the Office for National Statistics reveals the number of privately rented homes let to families with dependent children has risen from 30% to 37% over the past 10 years. The increasing number of tenants per property may also suggest people are more inclined to rent together after a sustained period in which rents have risen more quickly than general inflation. The index data shows the proportion of new tenancies taken on by three tenants rose from 3% in 2008 to 8% by last year. Homes with four or more tenants accounted for 7% of the market last… Continue reading
