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Well over half of UK home buyers rent before they can buy a property
Some 64% of aspiring home owners in the UK rent a property before they pick up the keys to their very own home, new research has found. Saving a deposit is one of the biggest financial hurdles facing potential first time buyers and the survey found that renters are less likely to benefit from help from family, with only 41% receiving any financial assistance, compared to 62% of those who are living with their parents or family members. Building up the necessary deposit is also challenging for those who are paying rent as the research revealed an average monthly rent in the UK of £681.70, according to the research from Clydesdale and Yorkshire Banks. Of those who live with their parents before buying their own property some 21% don’t pay rent with a third of these potential home buyers putting this money towards their deposit instead. However 52% do pay a fixed amount every month to their family landlords while 22% contribute towards food and bills and others simply pay what they can afford on a monthly basis. The research also found that those in rented accommodation find getting on the property ladder more stressful as 28% admit to putting themselves under pressure compared to just 16% of those who are still living with their parents and are in less of a rush to flee the nest. ‘Buying a first home is one of life’s most significant financial milestones and the banks can work with the individual needs and circumstances of potential first time buyers to help make their dreams of becoming a homeowner a reality,’ said Steve Fletcher, head of customer banking networks at Clydesdale and Yorkshire Banks. Meanwhile, separate research commissioned by Royal London shows that almost five million renters in the UK have no plans in place to cover their rent if they became too ill to earn for three months or more, even though recent cuts to housing benefits could leave them at risk. This is despite the fact that some 27% of renters in paid employment said they knew someone who had struggled in this situation and the survey found 34% admit they don’t know how long they could survive. The research also found that 60% of those who had some idea said that they could only survive on their savings for three months or less. Some 53% said their first move would be to apply for state benefits, some 47% would reduce their household expenses and 39% start using their savings. Only 7% of renters in paid employment have ever consulted a financial adviser. The most common place people turn to for financial advice is their family and friends. ‘Renters who assume that housing benefit will be there when they need it could find the reality is very different. A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly,’ said… Continue reading
New analysis suggests Brexit vote is affecting prime central London lettings market
The lettings market in prime central London has weakened rental as tenants capitalise on the current economic uncertainty including the upcoming referendum on the future of the UK in the European Union. The latest analysis report from specialist residential investor advisors London Central Portfolio (LCP) says that the rental market is reflecting a slowdown as a result of economic strains. It shows that whilst new lets have seen consistently positive rental upticks over the last five consecutive quarters, averaging a 5.5% increase overall, the market is beginning to subdue, according to the published statistics. Against a backdrop of falling stock markets, a collapse in oil prices and Brexit uncertainty, new lets have achieved just a 0.3% increase over the last quarter. This has been exacerbated by the predictably quieter Easter and May bank holiday period. The analysis, however, shows that re-lets are showing a significantly weaker picture, with a 1.2% fall in rents over the last quarter, following a fairly static picture over the course of the year. The report says that this is due to applicants being attracted to brand new properties, without any sign of previous use, coupled with a significant uptick in rental stock available. This has increased by 26.7% from 23,039 to 29,198 in the last three months, attributable to a reduction in transactions in the sales market which has led to more properties being available for rent. ‘The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations in the run up the EU referendum,’ said Naomi Heaton, chief executive officer of London Central Portfolio. ‘In light of the current market conditions, landlords may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void periods which may erode any increase in rent ultimately achieved. For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between tenancies,’ she explained. ‘A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in situ. With Landlords often able to achieve contractual rental increases, above that which can be achieved in the open market, average rental growth of 3.3% in the last quarter has been seen in contrast to the softer market elsewhere,’ she added. The report also points out that despite the somewhat gloomy picture generally, corporate belt tightening means that small one and two bedroom properties are reinforcing their position as the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with void periods down to just 23 days on average. For these properties, the area around Marylebone, Fitzrovia… Continue reading
Mortgage lending in UK fell in April, but no surprise due to March buy let boost
Gross mortgage lending in the UK reached £18.5 billion in April, some 29% lower than March’s lending total of £26.2 billion, but 16% higher than the £16 billion lent in April last year. CML economist Mohammad Jamei pointed out that a fall was expected due to a rush in buy to let lending in March as landlords rushed through sales to beat the new 3% surcharge on additional homes that was introduced on 01 April. ‘As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year,’ he explained. ‘This is likely to mean that over the next few months buy to let takes a back seat as lending is driven by first time buyers, movers and remortgage customers. The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment,’ he pointed out. ‘But it is possible that the uncertainty around the upcoming European Union referendum in June will weigh on activity in the upcoming months,’ he added. According to David Brown, chief executive officer of Marsh & Parsons, April lending was never going to live up to the March boost which was characterised by massively increased borrowing to landlords and second home owners. ‘But while we’ve seen a bit of a monthly comedown since then, the annual fundamentals are indicative of strength in the mortgage market. Widely expected to be an underwhelming month, April has still set an impressive benchmark for this time of the year, with lending levels harking back to the pre-recession era,’ he said. ‘Buy to let investors are just one type of buyer after all, and borrowing isn’t going to ground to a halt while they have a breather. The stamp duty changes didn’t affect the plans and intentions of hordes of other first time buyers and home movers, and in these areas buyer demand is still bursting at the seams,’ he added. David Whittaker, managing director of Mortgages for Business, pointed out that underneath the month on month lending patterns, there is a strong and steady current of buy to let lending critical to meet growing public demand for private rented accommodation. ‘Underlying annual growth in April shows a more sustainable path aside from any short term fluctuations and the need for buy to let mortgages to support the role of landlords,’ he added. The extremes of March make it futile to try to extract any meaningful insight from April's numbers, according to John Eastgate, sales and marketing director of OneSavings Bank. More importantly, market feedback suggests that normality has returned at enquiry level, although it will be the third quarter before we see this in new lending,’ he said. ‘A strong undercurrent of demand and a growing UK population means… Continue reading
