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Signs emerge of property market recovery as mortgage completions rise

Mortgage completions for first-time buyers, home movers and landlords ended last year on the rise.

Data from trade body UK Finance shows there were 29,490 first-time buyer mortgages completed in December, up 0.3% annually, while the number of home mover loans increased 3.2% to 29,400 compared with a year before.

There were 5,700 new buy-to-let home purchase mortgages completed in December 2019, up 3.6% annually.

Commenting on the figures, Sam Harhat, head of financial services at Andrews Property Group, said: “This latest data shows that chaos can often be a catalyst for action.

“While the closing stages of 2019 were among the most volatile for decades politically, many people decided to cut their losses and move home before any further potential upheaval.

“There’s a sense that first-time buyers were particularly wary that if our departure from the EU didn’t bring the roof in, they could soon be left behind.

“Fears of Brexit ultimately proving benign and the market rebounding caused many first-time buyers to make their move in 2019.

“What’s also encouraging is that buy-to-let completions were also up on the previous year. The buy-to-let market appears to have stabilised and is showing it has got fight left in it yet.

“Since the second half of January, the new climate of political certainty has unleashed a lot of pent-up demand.

“Mortgage approvals look set to continue to pick up during the Spring, with the aspirational buyers that have been missing for so long taking up the slack.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Savills predicts drop in first-time buyers and boom in house prices for the north

House prices in the north-west of England will grow six times faster than in London over the next five years, Savills claims.

The agent has released its latest five-year price forecast for the housing market, with quite a few caveats.

The figures are based on an assumption that the General Election does not result in a significant shift in policy environment, that the UK ultimately achieves an orderly exit from the EU over the course of 2020, and avoids recession.

It also assumes that the bank base rate increases gradually to 2% by the end of 2024, constraining mortgage affordability and therefore house price growth.

With all that in mind, Savills predicts that first-time buyer numbers will slip back when Help to Buy is withdrawn. A new scheme is being launched in April 2021 with regional price caps that will run until April 2023.

Despite this, Savills forecasts that transactions will remain at around 1.2m, with cash buyers representing around a third of the market.

Overall, the agent expects UK house prices to rise by an average of 15.3% over the next five years to average £266,000 in 2024.

It is predicting a 0.5% increase this year, 1% in 2020, 4.5% in 2021 and 3% in 2022 , 2023 and 2024.

The north-west is forecast to see the strongest price growth at 24% between 2020 and 2024, attributed to “the strength and diversity of the regional economy and the capacity for higher loan to income borrowing”.

This will be followed by 21.6% growth in Yorkshire, 18% in Wales and 20% in Scotland, Savills said.

In contrast, average house prices are expected to increase by just 11% across the south and east of England and 4% across Greater London.

Savills said this was because these regions have already previously outperformed the rest of the UK.

Lucian Cook, head of residential research for Savills, said: “We anticipate a continuation of trends seen historically, where London and the south-east underperform markets in the midlands and north.

“This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability.

“Markets further from the capital, such as Leeds, Liverpool and Sheffield, were much slower to recover post financial crisis and have much greater capacity for house price growth relative to incomes, even as interest rates rise.”

The agent also predicts that prime central London will, however, rebound and rise 3% next year, the first annual price growth since 2014, and increase 20.5% over the next five years.

Cook added: “PCL has become increasingly dislocated from the Greater London mainstream over the past five years; we expect that to go into reverse.

“Historically, a recovery in the prime markets has been sparked in prime central London, when the city’s most expensive properties start to look good value on a world stage.

“Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. Both signal that the market is set for a bounce, but this is being held up by uncertainty.”

5-year mainstream house price forecasts2019 av house price  £2019 est20202021202220232024Total5 year growth  2024 av house price £
UK231,0000.5%1.0%4.5%3.0%3.0%3.0%15.3%266,000
North West169,0004.0%2.5%6.5%4.5%4.5%4.0%24.0%210,000
Yorkshire & The Humber165,0001.5%2.0%6.0%4.0%4.0%4.0%21.6%200,000
Scotland151,0001.5%2.0%6.0%3.5%3.5%3.5%19.9%180,000
North East131,0001.5%1.5%5.0%4.0%4.0%4.0%19.9%157,000
West Midlands205,0003.0%3.0%5.0%3.0%3.0%3.0%18.2%242,000
East Midlands194,0001.0%3.0%5.0%3.0%3.0%3.0%18.2%229,000
Wales165,0001.5%2.0%6.0%3.0%3.0%3.0%18.1%195,000
South West256,000-0.5%0.5%4.0%3.0%2.5%2.5%13.1%289,000
South East321,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%357,000
East291,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%323,000
London462,000-2.5%-2.0%1.5%1.0%1.0%2.5%4.0%480,000

By MARC SHOFFMAN

Source: Property Industry Eye

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Moving costs reach record highs, led by rise in stamp duty

The average cost of buying and selling home in the UK has reached a record high at £10,414 or £24,585 in London, new research has found, a rise of 2% year on year.

It is higher stamp duty payments, up 4%, and larger conveyancing fees, up 5%, that are driving the cost of moving home, according to the annual study from ReallyMoving.

The research also shows that the costs for first time buyers have also risen, up by 2% year on year to £1,613.

Stamp duty now makes up some 44% of the total cost of a home move, rising to 65% in London. Those buying and selling, now pay on average £4,625 in stamp duty, based on the median property value, while conveyancing costs stand at £1,490.

Although varying significantly depending on the distance of the move and the volume of possessions transported, removals charges have also increased by 1% over the last year to £480 on average.

The cost of an Energy Performance Certificate (EPC) remains unchanged at £55, but other expenses have dipped slightly over the last year, such as a Homebuyers Report which now costs £408, a fall of 4%, and estate agent fees at £3,356 are down 1% as suppliers compete for business in a contracted market that has seen transaction levels fall 12.4% year on year.

Movers in London face the greatest cost of moving, with the upfront costs associated with buying and selling a home in the capital now at £24,585, almost 2.5 times the UK average.

With property prices in London following a downward trajectory in 2019, home owners are finding it harder to fund a move through growth in equity, therefore the high cost of moving is becoming increasingly prohibitive, the report says.

The South East, East and South West are among the most expensive regions for movers, with the East and West Midlands sitting in the centre of the table and Northern Ireland and the North East the least expensive locations as a result of lower house prices, enabling greater fluidity in the housing market.

Moving costs for first time buyers across the UK are considerably lower at an average of £1,613, due to the exemption of stamp duty for first time buyers on properties up the value of £300,000.

A 2% annual increase in overall costs has been driven mainly by marginal rises in removals and conveyancing fees. Yet higher house prices in London mean that first time buyers in the capital are typically paying £3,750 in stamp duty, bringing their overall costs to £5,684, some 3.5 times the UK average.

‘Home owners are having to dig deeper than ever before to fund a home move, with upfront costs reaching another record high in 2019,’ said Rob Houghton, chief executive officer of ReallyMoving.

‘Stamp duty charges may be fixed, but it is possible to make savings on other costs such as conveyancing, surveys and removals by shopping around online for the best deals and comparing ratings and reviews, as well as price,’ he added.

Source: Property Wire

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Mortgage boom helps drive northern powerhouse

The mortgage market is booming in the North of England with the number of first-time buyers soaring to a pre-financial crisis high.

Figures released today by UK Finance revealed, in 2018, the mortgage industry helped nearly 85,000 households buy their first home in the region – which is made up of the North West, North East and Yorkshire and Humber.

This is an increase of 3% on the previous year and is the highest level since 2006, according to UK Finance which is publishing the data to coincide with its ‘Northern Powerhouse’ dinner to discuss how financial services can support the region’s economy.

These strong figures, it suggested, were down better affordability in regions of the North, where the average deposits and income multiples were lower than anywhere else in England. It said there was an increase of 1.1% in the number of home movers.

Buy-to-let hotspots

It wasn’t just residential mortgages which were helping to drive the boom. Newcastle, Liverpool and Hull bucked the national trend and experienced strong growth in buy-to-let lending, UK Finance revealed.

It said this had been driven by lower house prices and a healthy labour market as well as strong rental demand. This allowed landlords to achieve higher yields than the UK average.

The growth in Hull was particularly strong – with buy-to-let lending soaring by 12.8%.

Jackie Bennett, director of mortgages at UK Finance, said: “These figures show the North of England has a strong and dynamic mortgage market, with lenders helping thousands of first-time buyers onto the housing ladder.

“This has been combined with a steady increase in home movers, making it easier for buyers to find a property that suits their needs.

She added: “The mortgage industry stands ready to work with the UK government and local authorities to capitalise on these strengths and help deliver on the full economic potential of the Northern Powerhouse.”

Strong regional disparities

While the figures were good news for the North of England, they also exposed weaknesses in other parts of the UK, particularly in London.

Shaun Church, director of Private Finance, said they highlighted the strong regional disparities in both housing demand and activity.

“Comparatively low property prices and strong rental demand makes the North an attractive prospect for landlords,” he said.

“After years of being slammed by regulatory changes making it harder to turn a profit, investment location has never been more important. Northern regions are still enjoying decent house price growth, meaning landlords can also enjoy an increase in the value of their asset.”

By Kate Saines

Source: Mortgage Finance Gazette

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First-time buyers are driving the property market

FTBs were the largest group of purchasers in 2018, accounting for 36% of all sales, and are expected to remain so in 2019.

The latest report from Hometrack has looked at the rising number of first-time buyers in the UK property market and how they have been the driving force for housing sales in recent years.

Growth in FTBs is expected to be driven in regional markets, where affordability remains attractive, supported by availability of higher LTV mortgages. However, they are not trying to purchase lower value homes and appear to be taking a longer-term view.

GetAgent.co.uk founder and CEO Colby Short, commented: “We have and always will be a nation of aspirational homeowners and so it should come as no shock that those that are yet to reach that life mile marker are the ones pushing the hardest to do so and driving the market forward when they get there.

“Although the barrier in achieving this goal remains large with house prices far from affordable, we are currently seeing what could be described as perfect conditions to help boost the number of first-time buyers.

“We’ve seen a prolonged period of affordability where mortgages are concerned, static house price growth in many areas and a healthy uplift in wage growth as well as financial incentives. All of which have helped to narrow the gap and make it easier to take that first step onto the ladder.”

The findings follow news that house prices remain steady, despite Brexit turmoil and homeowners putting their moves on hold. Earlier this month, Halifax reported that the average UK house price in August rose by 0.3% on a monthly basis but was up 1.8% in the year to August to reach £233,541.

The lender said that a shortage of properties coming to the market – as homeowners decide to stay put rather than move – was supporting house prices in the face of political uncertainty.

HMRC Monthly data revealed that there were 86,630 home sales during July, down approximately 12% year on year. However, mortgage approvals have risen slightly, with Bank of England figures showing that the number of mortgages approved to finance house purchases were 67,306 in July – this represents a 1.2% rise from June and at its highest level since July 2017.

Halifax managing director Russell Galley said: “There was no real shift in house prices in August as the average property value grew by just 0.3% month on month. This further extends the predominantly flat trend we’ve seen over the last six months, with the average house price having barely changed since March.

“While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors, such as affordability and employment remain strong.

“Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being.”

Discussing the rising number of first-time buyers in the market, Springbok Properties founder and CEO Shepherd Ncube added: “There’s no doubting that Help to Buy has had an impact in terms of fuelling huge additional demand on the side of first-time buyers and while it has its critics, the scheme has helped a vast number of people to purchase their first home who would otherwise have failed to do so.

“Another driving factor behind this rise of first-time buyers is their attitude towards a purchase. We’ve seen Brexit uncertainty cause many areas of the market to grind to a halt as both buyer and seller contemplate the ‘what ifs’ of transacting in the current landscape.

“However, this hasn’t deterred first-time buyers who remain grateful to be on the ladder at all, let alone making a profit from their bricks and mortar investment. At the same time, those who simply have to sell have had to do so at a reduced price and all of these factors combine to provide a favourable environment for those looking to buy for the first time.”

Source: DIY Week

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New scheme offers mortgage-free home ownership to first-time buyers

There’s a new way for first-time buyers to get on the property ladder – and it doesn’t involve getting a mortgage.

Launched to the public in July, Unmortgage offers people the chance to buy a share of between 5% and 20% in a property, which they can then live in.

Rent, set at local market rates, is paid on the remaining share, which is owned by an investor.

Homeowners have the option of building up their share over time, or can completely buy out the investor, reports the Manchester Evening News.

To qualify, you must have a minimum gross household income of £30,000 (or a maximum of £100,000), and the rent can only cost up to 36% of your income.

The idea is that buyers can become partial homeowners, without needing to worry about the salary-based lending caps normally applied by mortgage lenders.

According to the website, ‘Unmortgage is for you if you can’t afford to buy the home that you can afford to rent.’
Unlike shared ownership, it’s not just available on new builds, giving you more choice in the kind of property you buy . Once you’re in, you’ll be able to increase your share as often as you want.

The scheme also eventually allows you to buy 100 per cent of the property, as opposed to the 40 per cent cap in shared ownership schemes.

Here’s everything you need to know about the Unmortgage scheme:

How does Unmortgage work?    

If you’re a first-time buyer, you’ll need to pay at least 5 per cent of the deposit for your new home. Unmortgage requires new customers to pay at least £12,500 as a minimum to use the service.  

Once you’re up and running, you can buy up to 5 per cent more of your home each year, up until a maximum of 40 per cent. After reaching 40 per cent, Unmortgage expects buyers to either buy the rest of the property with cash or with a mortgage.

You’ll only be able to buy the property in full if its value has not fallen below purchase price.

Who can apply for Unmortgage? 

To apply you’ll need an income of between £30,000 and £100,000 before tax, whether you’re renting alone or with somebody else.

To use the service you’ll need an acceptable credit rating, and if you have struggled to meet rent payments and/or been made redundant in the past, chances are your application will be rejected.

What homes can you buy on Unmortgage?

Unmortgage has laid out a specific set of guidelines for the types of homes its investors are willing to to fund.

These include:

  • Homes in quiet, urban areas
  • Homes with no foundation problems
  • Homes which are ready to move in to
  • Homes with between two and five spacious bedrooms
  • Homes which are freehold, share-of-freehold or leasehold with a lease of at least 100 years.

As investors want to place their money into properties which will increase in value over time, Unmortgage will not help with the purchase of new-builds, properties on main roads, motorways or rail tracks, houses with ‘unfairly sized bedrooms’ or former social housing.

How is rent calculated?

To calculate the rent you pay on your home, Unmortgage will consider the rental value of similar homes in the area and then deduct your deposit from that amount.

Rent can rise each year in line with the RPI (retail prices index) measure of inflation. However, your rent price will not drop if inflation falls.

How is Unmortgage different from renting?

Although you don’t immediately own your new home, you won’t be restricted in what you can do with it. Even though you’re renting the part you don’t own yet, you’ll be able to have pets, nail up pictures and paint the walls. The only thing you won’t be able to do is major renovations, as these don’t always go to plan and could affect the price of your house before it has been fully paid off.

Should you use Unmortgage if you can get a mortgage for a home you love?

Unmortgage has been set up for first-time buyers who can’t get a mortgage for a home they could easily afford to rent. But if you can get a mortgage for a home you love, it’s advised that you speak to an independent advisor for a professional opinion on the best course of action to take.

Do you have to pay stamp duty?

In short, yes. Unfortunately, using Unmortgage will not make you exempt from paying stamp duty, and you may find yourself paying it at  an enhanced rate. The initial stamp duty costs will be split between yourself and the investment partner.

Unfortunately using the scheme will make you exempt from first-time buyer stamp duty discount, so this is something to consider.

Because you’re buying as part of a partnership with a business, both you and the investor will be charged with an additional 3 per cent stamp duty fee on top of the usual rates.

And, if you go from 40% to 100% ownership you’ll be liable to pay stamp duty again on the full property value – but this time without the 3 per cent surcharge.

What fees will you need to pay?

While Unmortgage claims to charge no fees, you will still be liable to pay for solicitor and surveyor fees, as well as any leasehold fees. These costs will be split proportionately with the investment partner.

A RICs surveyor will value the home every year, and online valuations will be provided each month.

Can you move out of your property before you’ve bought it in full?

If you decide you want to move out of your Unmortgage property before you have repaid the investors in full, you can do.

While you’re able to stay in your home as long as you keep up with rent payments, if you decide you want to go elsewhere, the funding partner will be given three months to decide whether they want to buy your stake or sell with you.

If you wish to move on you will be liable to pay certain fees, such as a £350 fee towards valuation costs of the property. You will then be eligible to split any remaining selling costs with the investor – a calculation which is based on your stake in the property.

By Rachel Pugh & Amardeep Bassey

Source: Kent Live

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Many people using Help To Buy scheme ‘could have bought a property anyway’

Significant numbers of people using the Government’s Help to Buy equity loan scheme in England would have been able to purchase a home anyway, according to a spending watchdog.

Around one in 25 home buyers using the scheme had household incomes of over £100,000, the National Audit Office (NAO) said.

The scheme had also helped to support large developers’ annual profits, according to the NAO, which said it was too early to tell whether the initiative had provided value for money.

Five firms combined – Redrow, Bellway, Taylor Wimpey, Barratt and Persimmon – accounted for just over half of sales made across England with the support of the scheme between 2013 and 2018.

It’s now beyond clear that rather than helping those who can’t afford to buy a home, Help to Buy has mainly been a subsidy for a housing bubble

Fran Boait, Positive Money

Redrow made up 3.7% of sales, Bellway accounted for 6.7%, Taylor Wimpey made up 11.9%, Barratt made up 13.3% and Persimmon accounted for 14.8%, according to the NAO’s analysis.

Larger firms tended to be better equipped to administer the scheme, the report said.

The NAO said the Government’s challenge now was to wean the property market off the scheme, which was launched in April 2013.

Research found 37% of households would not have been able to buy any property without the scheme.

But nearly a third (31% ) of buyers could have purchased a property they wanted without the scheme.

81% – Percentage of buyers supported by the Help To Buy equity loan scheme in England who are first-time buyers

And some buyers could have bought a property without the support of Help to Buy, but not necessarily a property they wanted.

 Around 4% of the 211,000 buyers who had used the scheme by December 2018 had household incomes of over £100,000.

Over the whole scheme, which is not means-tested, 10% of buyers had household incomes of over £80,000, or over £90,000 in London.

Commenting on the report, Fran Boait, executive director of campaigning body Positive Money, said: “It’s now beyond clear that rather than helping those who can’t afford to buy a home, Help to Buy has mainly been a subsidy for a housing bubble, benefiting property developers and existing home owners.”

The NAO’s analysis found that buyers who had used Help to Buy had paid less than 1% more than they might have paid for a similar new-build property bought without the support of the scheme.

(Help to Buy) has exposed the Government to significant market risk if property values fall, as well as tying up a significant public financial capacity

Gareth Davies, head of the NAO

By 2023, the net amount loaned through the scheme is forecast to peak at around £25 billion, with the investment expected to be recovered by 2031/32 and a positive return made overall.

But the NAO said the investment was exposed to significant market risk as it was sensitive to house price changes and the timing of buyers repaying loans.

It said there was also a cost in terms of opportunity in tying up money for a considerable period, rendering it unavailable for other housing schemes or priorities.

The scheme was launched by what is now the Ministry of Housing, Communities and Local Government.

Home buyers receive an equity loan of up to 20% (or 40% in London) of the market value of a new-build property. They are not charged loan fees on the loan for the first five years of owning their home.

Between the start of the scheme in April 2013 and September 2018, 38% of all new-build property sales were supported by loans through the scheme, accounting for around 4% of total house purchases across England during this time.

Around 81% of all buyers supported by the scheme were first-time buyers.

It was announced in 2018 that from April 2021, the revised scheme would be restricted just to first-time buyers, with lower regional limits on the maximum house purchase price.

The NAO said changes to the scheme aimed to reduce overall demand for it in its final two years, preparing the housing sector for its end in 2023.

Take-up of the scheme had been lower in London, where average house price-to-earnings ratios were higher, compared with the rest of England, the NAO’s report said.

Gareth Davies, head of the NAO, said: “Help to Buy has increased home ownership and housing supply, particularly for first-time buyers.

“However, a proportion of participants could have afforded to buy a home without the Government’s help.

“The scheme has also exposed the Government to significant market risk if property values fall, as well as tying up a significant public financial capacity.

“The Government’s greatest challenge now is to wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year from the mid-2020s.

“Until we can observe its longer-term effects on the property market and whether the department has recovered its substantial investment, we cannot say whether the scheme has delivered value for money.”

A spokesman for the Home Builders Federation (HBF) said Help to Buy has delivered against its objectives, to increase home ownership, boost housing supply and generate economic activity.

He said: “Help to Buy has been central to supporting new-build sales rates, and thus the construction of desperately needed homes, while the wider second-hand market has remained sluggish.

“At present, the mortgage market is not equipped to support realistic lending to first-time buyers purchasing in the new-build sector.

“We will continue to work with lenders and stakeholders to try and ensure the withdrawal of Help to Buy does not lead to reduced housing supply or first-time buyer aspiration.”

Housing Minister Kit Malthouse said: “Help to Buy has been genuinely life changing for first-time buyers across the country, helping them secure their first step on the property ladder.”

He said the scheme has been “win-win” – supporting first time buyers, increasing home building and also set to make a profit for the public.

He said: “From 2021 the scheme will be extended and strengthened to make it exclusively for first-time buyers to support those who need it most.”

Source: Shropshire Star

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Housing Secretary in backlash after proposing buyers raid pension pots to buy homes

Housing Secretary James Brokenshire has clashed with Government departments and pension experts after he proposed allowing first-time buyers to use their pension savings to raise a deposit to buy their home.

The idea was immediately quashed by former pensions minister Steve Webb, warning that it risks ruining people’s retirement.

The Department for Work and Pensions is also reported to have complained that it did not approve and had not been informed of the proposal.

There were also suggestions that Brokenshire’s proposal would simply hike house prices.

Speaking at the Policy Exchange think tank, Brokenshire said the Government should look at allowing an individual to use part of their pension pot as a deposit on a first-time home purchase.

He said: “We should be changing the necessary regulations to allow this to happen, protecting the integrity of pension investments but allowing lenders to innovate and design new products to bring this opportunity to consumers.

“It seems rather obtuse that we would deny people the opportunity to do this, given that we know those who own their own home by retirement are on average a) wealthier and b) do not have the burden of the largest expense in retirement – accommodation.

“And it is, after all, their money.”

He said the average 35 to 44-year-old has a pension wealth of approximately £35,000 and could combine that with a partner to support a deposit.

He added: “To those who are in their 20s and finding it difficult to save, this idea offers a genuine route to a deposit.

“We can say to that generation that there is a way, they do have a choice, they too will have that freedom.”

Brokenshire said similar schemes already exist within New Zealand’s Kiwisaver and in Canada where regulations were recently changed to allow people to use up to $35,000 of their pension savings to purchase a home.

A spokesman for Brokenshire said the timing of the introduction of such a scheme would be up to the next Prime Minister once Theresa May is replaced.

Such a change would require industry consultation, which could include elements such as a cap on withdrawals.

The spokesman denied this could create a bigger pensions crisis in the future, adding: “There are multiple models that would protect the integrity of pension investments.

“This assumes everyone would use the new freedom, which is not likely. The idea is about accessing their pension pots earlier and still having decades beyond to save.”

Internal departmental analysis by the Ministry of Housing, seen by EYE, suggests buyers may end up with a lower value pensions pot over 30 years, but would have higher monthly savings due to mortgage repayments being cheaper than renting and would have a financial asset by owning a property.

Webb, a pensions minister in the Conservative and Liberal Democrat coalition government and now director of policy at Royal London, said: “The amounts going into pensions for young people are pretty small already but at least they are starting young – if you empty that then they’ll end up working till they’re 75.

“It is fine to find giving young people new ways of buying a home but if there aren’t enough houses, then you have not helped them get a house and you’ve ruined their retirement.”

Tom Selby, senior analyst at AJ Bell, said: “This idea smacks of dangerous political short-termism.

“While the housing market clearly has its problems – particularly for first-time buyers who might struggle to afford the sizeable deposits now demanded by lenders – allowing people to raid their pensions is not a sensible answer.

“Chronic undersaving for later life is one of the biggest challenges facing society today, so a proposal which encourages people to drain their pension pots risks making this problem even worse.

“There is no guarantee that such a proposal would actually help people get on the housing ladder at all.

“Unless the Government dramatically boosts the supply of homes in the UK then this plan risks stoking house price inflation.

“It’s also not clear why housing should be the only beneficiary of early pensions access. People could legitimately ask why, for example, it shouldn’t be extended to cover debt repayments or to help towards wedding costs.

“The further you go down this rabbit hole the greater the risk you fundamentally undermine the central plinths of the UK’s retirement savings landscape.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Drop in first-time buyers a concern

The housing market would face a disaster if the number of first-time buyers entering continues to drop, according to housing experts.

This month (May 16) UK Finance lending trends showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018 and the first month there had been a year-on-year decrease since September 2018.

Up until then the ailing housing market had been largely bolstered by this group of buyers.

Steve Brown, branch manager at Winkworth Estate Agents in Blackheath, said it would be “disastrous” for the housing market if this continued as “first-time buyers hold all the cards”.

He said: “These buyers coming in at entry level means the people in those houses can now sell, often moving to family homes or larger properties.

“If the first-time buyers aren’t there, these people become stuck and the market would slow considerably as part of the knock on effect.

“House prices would be hit hard. You would see a drop in house prices fairly quickly of about 5 to 10 per cent.”

Mr Brown went on to say that first-time buyers had become even more vital to the housing market since changes in the buy-to-let market meant it was no longer financially viable for those struggling to sell to rent out the property instead.

Landlords saw an additional 3 per cent stamp duty surcharge on second homes in April 2016 alongside phased cuts to mortgage interest tax relief, while buy-to-let borrowers are now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Mark Harris, chief executive of SPF Private Clients, also said the decrease in the number of new buyers after a period of continuous growth was concerning for the market.

He said: “First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.”

Dan White, of White Financial Services, agreed that the market should “absolutely be worried” if first-time buyer numbers started to slip and stressed there was not enough innovation being pushed to help those looking to make their first steps onto the property ladder.

He added that the market was not an easy one for first-time buyers, particularly as the current generation of new buyers were suffering from huge inflation to house prices over the previous years and a restriction in wage growth in the majority of sectors.

He said: “The income to house price ratios just don’t correlate. Even in the most affordable towns, first-time buyers are still faced with at least a six or seven times income multiple.

“Once you look at the mortgage affordability assessments with lenders and take into consideration their lending restrictions on income multiples at certain loan to value levels, it leaves the first-time buyer with very little options.”

But others say it’s “too soon” to tell if the UK Finance stats are part of a long-term trend that would cause concern for the market.

Carmen Green, adviser at Xpress Mortgages, said: “I have witnessed several occasions where first-time buyers have grabbed a bargain as they jump in to fix chains that have collapsed in an otherwise shaky market.

“Particularly in the south east, the fall in property prices has given opportunity to first-time buyers who otherwise wouldn’t be able to afford to buy.”

Steve Patterson, director at Teeside Money, agreed that although a drop in the number of new buyers could cause a domino effect on the market, he said he “was not concerned at this stage”.

He said: “I think it will just be a blip. I don’t think there will be a big decline in the numbers unless there is a major impact to lending.”

By Imogen Tew

Source: FT Adviser

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First-time buyer purchases down 2.4%

The number of consumers borrowing to buy a new property was down across first-time buyers, home-movers and buy-to-let purchases in March, when compared with last year.

UK Finance’s mortgage lending trends, published today (May 16), showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018.

According to the trade body, this was the first month there had been a year-on-year decrease in first-time buyers since September 2018.

There was also a decline in the number of completed home-mover mortgages, which fell by 6 per cent to 25,280 compared to March 2018.

Mark Harris, chief executive of SPF Private Clients, said: “The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let’s hope it is just a blip in the numbers.

“First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.”

The remortgage market continued to fare better however and in total, there were 4.1 per cent more residential remortgages in March than in the same month the year before.

Within this, there was a rise in the number of those who borrowed more money through their remortgage — up 9.1 per cent to 16,810 — while ‘pound for pound’ remortgages, where the consumer does not borrow any more money, dropped slightly by 1.1 per cent to 15,030.

This was the twelfth consecutive month of year-on-year growth in remortgaging and, according the UK Finance, this reflected the number of fixed-rate deals that are coming to an end as borrowers actively search for better, more attractive rates.

The remortgage market also grew in the buy-to-let sector but the purchase market declined.

About 5,000 new buy-to-let purchase mortgages completed in March, which was 9.1 per cent fewer than in the same month in 2018, while the number of remortgages increased by 3.9 per cent year-on-year to 14,400.

UK Finance stated the buy-to-let house purchase activity continued to contract due to tax and regulatory changes.

Gareth Lewis, commercial director of property lender MT Finance, agreed.

He added: “Remortgaging is up as those who bought before stamp duty hikes were introduced in 2016 are now remortgaging their fixed rates onto another competitive deal.

“Borrowers are taking out longer-term fixes on residential and buy-to-let deals as they protect themselves from wider uncertainty.”

In January, the Intermediary Mortgage Lenders Association warned that landlords would start to feel the pinch of new regulation in their tax returns for the first time, included the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016 and cuts to mortgage interest tax relief.

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said despite potentially disappointing numbers, there were no significant movements one way or the other.

He said: “[These figures] reflect what we are seeing at the coalface — it is a bit busier one month but down the next and then up again.

“It is no surprise either that buy-to-let mortgages are continuing their downwards trend as landlords face an onslaught of tax and regulatory changes with more on the way.

“We are finding buy-to-let remortgaging increasing is down to properties having to work harder in order to maintain profit levels so this is likely to continue.”

By Imogen Tew

Source: FT Adviser