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Em Morley

April sees 10% dip in house purchase lending

Published On: June 16, 2015 at 2:38 pm

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Gross lending declined during April, according to latest figures released by the Council of Mortgage Lenders (CML).

The report indicates that lending now totals £15.8bn, down from the £16.1bn recorded in March and 16.8bn in April last year.[1]

Annual decline

Despite purchase lending remaining steady from the month to March, there was a significant fall from a year ago. This was due to a decline in both first-time buyers and home movers.

However, first-time buyer loans have increased during the last twelve months, although income has increased at a quicker rate relative to loan sizes. This has meant a decline in the average loan-to-income ratio. What’s more, loan-to-value ratios have also slipped in comparison to a year ago, from 84% to 82.1%.[1]

With the mortgage war in full swing, first-time buyers are paying less to service their mortgages as has ever been recorded since the CML tracking began in 2005.

Fluctuation

Average home mover loans decreased during April in comparison to March, but were up on the same period last year. Average income also increased in April, with loan-to-income decreasing month-on-month and year-on-year as a result. In addition, remortgaging activity from homeowners was down both monthly and annually.

Buy-to-let lending levels in April were down on March’s levels but were up year-on-year. This can be attributed to the rising levels of remortgage activity experienced in the sector since the turn of the year.

April sees 10% dip in house purchase lending

April sees 10% dip in house purchase lending

Over the last twelve months, nearly 30% of lending to homeowners was for remortgaging, rising to 52% in the buy-to-let market.[1]

Paul Smee, director general of the CML, stated, ‘house purchasing in April was relatively subdued compared to last year, but similar to activity in March.’ He feels that the, ‘economy is recovering, with employment up, earnings growing and competitive mortgage rates, so we expect activity to continue building as the year progresses.’[1]

‘Buy-to-let is showing stronger growth than home-owner lending, buoyed significantly by remortgaging, which continues to remain more subdued in the home-owner market.’[1]

[1] http://www.propertyreporter.co.uk/finance/april-sees-10-dr0p-in-house-purchase-lending.html

 

 

UK property price increases slow in April

Published On: June 16, 2015 at 12:22 pm

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Official data from the Office for National Statistics (ONS) released today shows that UK house price growth slowed in the year to April, with a reduction in rises recorded in the capital part of the reason.

The ONS figures indicate a rise of 5.5% in the twelve months to April, in comparison to a 9.6% increase in the year to March. This is the slowest annual property price growth since December of 2013. The ONS clearly stated that, ‘the pace of annual house price growth fell across the majority of the UK in April 2015.’[1]

Capital pains

Despite rising by 4.3%, this was the lowest recorded increase in London for over two-and-a-half years. Jonathan Samuels, chief executive of Dragonfly Property Finance, said that, ‘if, as this report suggests, the extent of the drop-off in annual prices between March and April is due to the price slowdown in London, this underlines quite powerfully the extent to which the capital can skew the UK average.’[1]

More encouragingly, Samuels went on to suggest, ‘while annual London prices fell below the UK average for the first time in nine years in April, I wouldn’t expect them to stay there for long.’[1]

UK property price increases slow in April

UK property price increases slow in April

UK increases

In the twelve months to April, property prices rose across the UK, with Northern Ireland recording the largest rise of 8.8%. Prices in England increased by 5.8%, with Scotland showing a rise of 2.2% and Wales 1.3%.[1]

Month-on-month, UK prices dipped by 1.3% from March, with the average property price now £271,000.[1]

 

[1] http://www.bbc.co.uk/news/business-33148004

 

Many fear taking their mortgage into retirement

Published On: June 16, 2015 at 11:26 am

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New research from the BSA has indicated that almost half of 25-34 year olds believe that they will need a mortgage that extends into retirement, if they are to fully repay their loan.

Additionally, 27% of people in this age bracket feel that they will struggle to get a mortgage into their retirement due to their credit history, income level or age.

Living longer

Paul Broadhead, Head of Mortgage Policy at the BSA noted, ‘we are all now living much longer and getting onto the property ladder later in life. Many younger buyers are realising that they may not be able to pay of their mortgage until after they retire. As the average age of a first-time buyer increases, borrowing into retirement is becoming the new normal, rather than a niche form of lending.’[1]

He continued by saying that, ‘the Mortgage Market Review, introduced just over a year ago, has had an impact on borrowing. The application process is much more rigorous and borrowers now have to contend with strict affordability assessments that factor in other commitments. This means they may have to borrow over a longer term to secure a mortgage.’[2]

Many fear taking their mortgage into retirement

Many fear taking their mortgage into retirement

‘These demographic and regulatory changes mean some borrowers may find their mortgage application is rejected if they need to borrow into their anticipated retirement. The mortgage market needs to change to cater for this shift in borrowing,’ Broadhead added.[3]

Positivity

Mr Broadhead went on to say that it is not all, ‘doom and gloom,’ for would-be homeowners. He suggests that, ‘the building society sector tends to be more flexible and willing to offer mortgages that extend into retirement. Some societies do not have upper age limits, tend to take case-by-case approach to applications and are keen on developing long-term products that cater to first-time buyers who may want or need to borrow into older age.’[4]

Concluding, Broadhead said that, ‘the sector is also keen to debunk the myth that once you are over 40 you are too old to get a mortgage.’[5]

[1] http://www.propertyreporter.co.uk/finance/paying-off-a-mortgage-by-65-is-no-longer-a-reality-for-many.html

 

 

Landlord anger at estate agent commission fees

Published On: June 16, 2015 at 10:17 am

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A landlord who has found himself in the middle of a legal tussle with Foxtons estate agents over a £616 bill to repair a light fitting claims he has been inundated with messages of support.

Dr Chris Townley, academic at King’s College London, claims many fellow landlords have contacted him to express their concerns over how estate agents conduct their business. As a result, he is campaigning for the letting industry to become clearer for property owners and tenants alike.

‘Morally wrong’

An angry Dr Townley stated that, ‘this behaviour is wrong, morally and legally. Foxtons has never apologised properly, they do not even think they have done anything wrong. I’m happy to carry on fighting and I hope it pushes them to change their behavior.’[1]

The cause of Dr Townley’s anger centres on a dispute over a £616 charge to fix a light fitting in a three-bedroom house that he let out in the Forest Hill area of the capital in 2013. After being unaware of the cost charge until recently going through paperwork, Dr Townley then contacted the company that had carried out the job.

It was discovered that the subcontractor had charged just £412.50 to carry out the work, but Foxtons had added 33% in commission. Solicitors working on behalf of Dr Townley have started legal action against Foxtons, citing that the, ‘hidden commission’ was not included in the landlord’s contract.

Peace of mind

Dr Townley paid Foxtons 17% plus VAT on rent of £1,400 per month for two years. He decided to let his property through an agent to achieve peace of mind, as the house was his family home and he was to be spending time abroad.

‘I keep wondering what I could have done better to have stopped this happening to me,’ Dr Townley said. ‘When you go through an agent, you trust that they’re acting on your behalf. It seems stupid to have paid £600 to repair a light, but I thought they were replacing two lights and trusted the agency.’[1]

It is estimated that thousands more landlords could be entitled to compensation from Foxtons, with the legal firm suggesting that the final cost could rise to as much as £42m.

Landlord anger at estate agent commission fees

Landlord anger at estate agent commission fees

Disappointed

Dr Townley said that while the whole episode has put him off renting a property, he believes that there are many estate agencies that provide a quality service.

In a statement Foxtons said:

‘We are incredibly disappointed to hear when any customer is dissatisfied with the service they have received, however, as a legal dispute we are not in a position to comment on the specifics of this case. We are satisfied though that our fees are clearly laid out within our terms and conditions and that approvals are obtained from our landlords before works commence on their property.’

‘As part of our managed service to our landlords we arrange for maintenance works to be carried out on their behalf from a panel of carefully vetted and trusted contractors. Due to the volume of work we provide we are able to achieve discounted rates offering competitive value with the benefit of efficiency, availability and quality of work that many landlords would not be able to achieve on their own.’[1]

 

[1] http://www.telegraph.co.uk/finance/property/11670878/Landlords-in-tears-over-hidden-estate-agency-costs-following-Foxtons-case.html?utm_source=dlvr.it&utm_medium=twitter

 

 

Housing rents rise across whole of Britain

Published On: June 15, 2015 at 5:03 pm

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Residential rents rose throughout Britain in the three months to May, according to the latest HomeLet rental index.

This means that the average monthly rental price is £935, or £738 if London is excluded. The rental index also showed that the speed of growth in the capital is rising after a sluggish, election-causing period. Average rents agreed in the capital for new tenancies in May exceeded £1,500 per month for the first time.[1]

Record rises

The index reveals that UK rents are now 10.7% higher than at this time last year. Additionally, it is only the third time that rents have increased across Britain since the rental index began.

By region, the South West saw the largest increase, with rent prices rising by 13.6% year-on-year. Scotland saw growth of 9.6%, the South East 9.4% and Greater London 9.2%.[1]

Within Greater London, the average rent is now £1,472 for the three months to May 2015. If just new tenancies are examined that were agreed in May alone, average rents exceed £1,500, with an exact figure of £1,506.[1]

Housing rents rise across whole of Britain

Housing rents rise across whole of Britain

Double-digit growth

‘Rental values are now increasing year on year across the country, with no exception,’ observed Martin Totty , chief executive officer of Barbon Insurance Group, parent company of HomeLet. ‘After a short period of London rents rising more slowly, when it seemed the rest of the UK may catch up or even exceed the capital in the speed at which rent prices were increasing, we now see the rate of price rises in London returning towards double digit growth, while the rest of the UK continues to rise steadily,’ he continued.[1]

Totty went on to say, ‘with the whole of the UK experiencing increases in rent prices agreed on new tenancies, it is possible this is an early indicator of a post-election private rental market where both landlords and tenants might expect rent prices to keep rising as demand continues to grow.’[1] 

[1] http://www.propertywire.com/news/europe/uk-residential-rental-prices-2015061510627.html

Demand for £2m homes in London borough increases

Published On: June 15, 2015 at 4:03 pm

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A new report from boutique estate agency Patterson Bowe has revealed that the outcome of the General Election has been good news for the swanky borough of Kensington and Chelsea in London.

Increased interest

With the threat of mansion tax a distant memory, the agency suggests that there has been an average of 30 would be buyers for each property listed at £2m or above in the borough.

As a result, vendors at the top end of the luxury market have been able to achieve above average asking prices for properties over £2,000 per square foot in prime regions.

Despite the surging interest, Stuart Patterson, Managing Director at Patterson Bowe, believes that concerns over Stamp Duty is still the largest obstacle to smooth transactions of homes valued over £2m. This, he believes, has led to a drop in supply with a surplus in demand.

Demand for £2m homes in London borough increases

Demand for £2m homes in London borough increases

Mr Patterson said, ‘of the properties we currently have under offer at £2m and above, the majority have now achieved above average prices for the area at more than £2,000 per square foot. Although the recent hike in Stamp Duty is taking time to be absorbed into the market, it remains a significant factor both to a purchaser and conversely to vendors considering moving or trading up.’[1]

‘However, such has been the flurry of buyer demand since the Election we would be confident in assuring anyone thinking of selling in the Borough that they would be able to command a price that would comfortably include any Stamp Duty costs into the overall purchase price owning to the highly competitive nature of the current market, ‘Patterson added.

 

 

[1] http://www.propertyreporter.co.uk/property/high-demand-for-2m+-properties-in-kensington-and-chelsea.html