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Annual House Price Growth Remained Sluggish in February

Published On: March 1, 2019 at 10:30 am

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Annual house price growth remained sluggish in February, according to the latest House Price Index from Nationwide.

The building society found that the average house price in the UK increased by 0.4% in the year to February. On a month-on-month basis, property values experienced a marginal decline of 0.1%, taking the average house price to £211,304.

Robert Gardner, the Chief Economist at Nationwide, comments on the figures: “After almost grinding to a complete halt in January, annual house price growth remained subdued in February, with prices just 0.4% higher than the same time last year. 

“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened.”

He observes: “Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period. 

“While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.”

Homeownership

Gardner assesses homeownership levels: “The latest English Housing Surveyfrom the Ministry of Housing, Communities & Local Government (MHCLG) showed a slight rise in the homeownership rate in 2018 to 63.5% (from 62.6% in 2017). 

“The rise in homeownership was driven by an increase in the number of people owning their home with a mortgage, which began to increase again after declining continuously since 2005. The number of people owning their own home with a mortgage rose by 5% over the year to 6.9m, though this is still 20% below the peak recorded in 2000.”

He reports: “Supportive labour market conditions and a number of policy changes, especially in the regulatory and tax system, have improved the bargaining position of homebuyers relative to investors. Government schemes, such as Help to Buy: Equity Loan, have also helped support first time buyer numbers. 

Annual House Price Growth Remained Sluggish in February

“The biggest improvement in homeownership over the past year has been amongst those aged 35-44, helping to reverse some of the decline seen in the last few years. Nonetheless, at 57%, the homeownership rate amongst this age group is still well below its 2006 peak of 73%.”

Gardner adds: “The number of households owning their homes outright remained at a record high of 7.9m. This figure has increased by 1.2m over the past decade, almost entirely amongst homeowners aged 65 or above.” 

Comments

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, responds to the data: “It’s a pretty unremarkable start to the year, but, assuming there’s no delay to Article 50, this is going to be the mood music until we get through to April. 

“February can be a mixed bag, but it’s generally a time of year when the market starts to really pick up in terms of post-Christmas activity. There are extenuating circumstances now, of course, that are affecting that typical pattern, and delivering us the first quarterly fall since the middle of 2018. 

“The market is falling in real terms, but, in the more expensive parts of the country, particularly London, it’s going to take a more significant retreat in prices to pull first time buyers to the table in significantly greater numbers.”

Steve Seal, the Director of Sales and Marketing at Bluestone Mortgages, also comments: “Although modest house price growth will be welcomed by buyers, other financial obstacles are still blocking many from accessing affordable lending. High street lenders do not have the underwriting capacity to assess customers outside the traditional mainstream criteria, and this particularly affects those who have a blip in their credit score.

“However, there is support available for these customers, particularly within the specialist market. Bluestone Mortgages revealed that 37% of brokers believe the specialist market is set to grow by at least £1-£5 billion over the next six months – no doubt a result of the growing numbers unable to fit the vanilla mould. Specialist lenders can provide tailored solutions, and not simply basing this off a number on a computer screen.”

Top Tips for Letting your Home, from ARLA Propertymark

Published On: March 1, 2019 at 9:57 am

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If you’re a homeowner who is thinking about letting your home to tenants, there are many things to consider before putting it onto the rental market. 

From practical advice to your legal responsibilities as a landlord, ARLA Propertymark (the Association of Residential Letting Agents) has some top tips to get you started.

Peter Savage, the President of ARLA Propertymark, says: “With the 50th annual English Housing Surveylast month finding the private rented sector shrunk from 4.7m dwellings in 2016/17 to 4.5m in 2017/18, there has never been a greater need for landlords. 

“Letting your property is a big decision, though, both for you and the tenants that will be living there, so it’s important you understand what being a landlord means. We’ve put these tips together to ensure you understand your responsibilities as a landlord, know how to protect your property, and keep your tenants happy, dealing with any issues that may arise.”

Do your research

The first thing you should do is get to know your local housing market. Research similar properties in the area and find out how much they are being let for per month. If your rent price is set too high, then prospective tenants will be instantly put off. A letting agent will be able to advise you on this.

Once you’ve done your homework, set a competitive rent and aim to keep your property filled at all times, to minimise void periods.

Check with your mortgage provider

By letting your home, you go from being a homeowner and occupier to a landlord, and, with your new status, comes great responsibility. In the first instance, you need to check if your mortgage permits you to rent out your property, as some agreements include caveats to prevent homes being let to tenants. 

If you are unsure, speak to your mortgage lender and they will be able to advise you accordingly.

Know your responsibilities

Being a landlord is a 24/7 job, so you should be prepared to receive calls from your tenant at any time during the day or night. Some issues will need immediate attention, and, unless you have a managing agent, you are responsible for all repairs and maintenance.

Get the property ready

Make sure that your property is clean and any modernisation or DIY projects are completed. It will be more attractive to prospective tenants if it’s had a fresh lick of paint, all repairs are done and, if necessary, new flooring has been installed. 

You should also think about the type of tenants that your property would be best suited to, for example, young families, students or single professionals. This will determine whether you should let it furnished or unfurnished. If possible, offer both options, so that the agent can market your property to a wider audience.

Top Tips for Letting your Home, from ARLA Propertymark

Sort out the insurance

Your existing home insurance provider must be made aware of your intention to let your property, as your policy will probably need to be amended. While specific landlord insuranceisn’t a legal requirement, it’s advisable, as the policy will protect your buildings, contents and investment as a whole. 

Rent guarantee insurance is also available to protect your rental income against tenant rent arrears.

Legal requirements

When it comes to being a landlord, there are more regulations to comply with than you could even imagine. To put it into perspective, there are currently around 150 laws that landlords must adhere to while letting a property. 

At the start of a tenancy, you must conduct Right to Rent checksunder immigration law, protect your tenant’s depositand ensure that all the essential paperwork is in place.

While it isn’t a legal requirement, it’s a very good idea to have a written tenancy agreement in place, so that both you and your tenant understand your rights and responsibilities.

The safety of your tenants is also essential, so you must also arrange a gas safety checkevery year. It’s also wise to make sure that all electrical appliances and wiring are tested regularly, too, as the Government will soon be introducing mandatory checks. Finally, it goes without saying that your rental property must be fitted with smoke alarms on every floor and carbon monoxide detectorswhere necessary.

By law, your property must have an Energy Performance Certificate(EPC) that is rated E or above. You won’t be able to legally market the home unless you reach this standard and have a certificate to prove it, so get it sorted as soon as possible – they’re valid for ten years.

Regular inspections

It’s important to undertake regular inspections of the property, although, remember that you can’t enter the home without your tenant’s permission. This is classed as trespassing and is illegal. Give them at least 24 hours’ written notice and stipulate your periodic inspection schedule in the tenancy agreement.

Choose the right agent

If you want to make the process of letting your home pain-free, then use a letting agent to manage the property and guide you on everything that you need to know. A good agent will take away the stress of finding suitable tenants and will ensure that your let complies with the right regulations.

If you use an agent, make sure that they have Client Money Protection(CMP) in place, which ensures that, if the agent goes bust or runs off with your money, you will be reimbursed. 

Good luck if you’re planning on letting your home to tenants in the near future! 

London Rental Yields Improving as the Market Bottoms Out

Published On: March 1, 2019 at 9:01 am

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London rental yields seem to be improving, as the property market in the capital shows signs of bottoming out, reports estate agent Chestertons.

House prices in the capital have dropped in recent years, with property values in prime London experiencing the sharpest declines. They are now close to 20% below their peak in 2014, according to various indices.

However, there are now fresh signs that the London property market is finally bottoming out, as a substantial rise in people registering to buy homes is coupled with a significant decrease in the number of new properties coming onto the market.

Chestertons has witnessed a 35% increase in the amount of buyers registering to purchase properties in the capital since the start of this year, compared to the corresponding period of 2018.

In addition, the number of agreed sales has risen by 7% year-on-year, while property viewing appointments have increased by 12% over the same period. This further demonstrates the existing strong buyer demand in the market.

But the estate agent reports that the number of new properties coming onto the market during this period in London has fallen by 22% annually, adding to the widening supply-demand imbalance in the market, which has slowed the rate at which house prices have been declining in the capital.

London Rental Yields Improving as the Market Bottoms Out

The latest House Price Indexfrom the Office for National Statistics (ONS) shows that growth in London improved from an average of -1.4% in December 2017 to -0.6% in the same month last year.

Meanwhile, in Zone 1, Chestertons’ own data shows that, in the three months to December 2018, prices in prime locations dropped by an average of 1.2%, which is a considerable improvement on the -2.2% rate recorded in the previous quarter.

As house prices have fallen significantly since 2014 and rents have increased in many parts of the capital, due to a shortage of available rental homes, London rental yields are also picking up and supporting investor demand.

London rental yields in locations covered by Chestertons stood at an average of 3.2% at the end of December last year, compared to 3.0% at the same point in 2017.

In Zone 1, rental returns increased to an average of 2.8%, from 2.7% in the previous year.

Guy Gittins, the Managing Director of Chestertons, says: “Following two years of substantial price drops, the market is now bottoming out in London. 

“Property values in the capital – particularly in prime locations – have now come down to a level that is proving increasingly attractive to potential buyers, driving a huge surge in the number of people registering with agents and buying property since January.”

He continues: “At the same time, the number of new properties being put up for sale has plummeted. This dramatic imbalance between supply and demand is starting to fuel small price increases in areas like Hyde Park and Putney, as competition ramps up – and we’re even seeing instances of buyers attempting to gazump others by offering to pay over asking price. The signs of recovery are there, with the prime market leading the way.

“It’s not just local buyers who are coming to the market in their droves now, but investors, too, who are seeing improved yields and good opportunities.”

Gittins adds: “With 29thMarch looming large in people’s minds, overseas buyers fear their window of opportunity is closing, and are moving fast to invest in the London property market while prices are low and sterling is weak.”

Criminal Landlord Enforcement in England Cut by a Quarter

Published On: February 28, 2019 at 10:57 am

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Councils across England have cut the amount that they are spending on dealing with criminal landlords by a quarter compared with 2009/10, the Residential Landlords Association (RLA) has found.

According to analysis by the organisation, while spending by local authorities in England on housing standard activities was £44.5m in 2009/10, by 2017/18, that had fallen to £33.5m – a drop of £11m.

With over 150 Acts of Parliament containing more than 400 regulations governing the private rental sector, the RLA argues that better enforcement of these laws, backed up by greater funding, is key to driving out the minority of landlords who can make life a misery for tenants and bring the industry into disrepute.

While the Government has recently made £2m available for councils to support efforts to tackle problem landlords, the RLA does not believe that one-off pots of money provide the certainty for councils to be able to plan long-term enforcement action.

New civil penalty powers enable councils to keep the proceeds of fines levied on criminal landlords and use this money for further enforcement. The problem is that councils don’t have the resources to kickstart the process by taking action against rogue landlords that then leads to fines generating funding for further action, the RLA says.

It is calling on the Government to provide in the forthcoming Spending Review a multi-year funding package to support initial enforcement action.

John Stewart, the Policy Manager at the RLA, insists: “Criminal landlords undermine the reputation of the decent majority, cause tenants to suffer and have no place in the sector.

“Local authorities must have the funds they need to properly enforce the wide range of powers they already have to tackle substandard housing and criminal behaviour. Our analysis shows that, for all the warm words, councils are in desperate need of new funding to ensure this happens. The Government should use the Spending Review to address this as a matter of urgency.”

Business as Usual for Sellers, but Buyers put Plans on Hold

Published On: February 28, 2019 at 10:28 am

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It’s business as usual for home sellers, but buyers are putting their plans on hold, according to the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

The research covers January 2019.

Housing demand

In January, the number of home hunters registered per NAEA Propertymark member estate agent branch fell from an average of 304 in December, to 297. 

Annually, demand has fallen by a fifth (19%), from 367 in January 2018, as buyers hold off on making any decisions, in light of the current political climate.

Property supply

The supply of available homes to buy dropped by 14% in January, from an average of 42 properties per branch in December, to just 36.

On an annual basis, supply is unchanged.

First time buyer sales

First time buyers took advantage of weakened demand in January, as the number of sales made to the group increased for the second consecutive month, from 24% in December to 26%.

This is the highest level recorded since July 2018, when first time buyers completed 30% of sales.

Agreed sales

Following a dip in the number of sales agreed per branch over the last few months, this figure rose in January, from an average of five in December, to seven. 

Year-on-year, the amount of sales agreed per branch was unchanged.

Mark Hayward, the Chief Executive of NAEA Propertymark, says: “January is usually the time where we’d expect to see house hunters flood the market following the festive lull; however, this didn’t happen last month. It’s normal that, during a period of uncertainty, buyers put their plans on hold and, until there’s further clarity on what Brexit will mean for the market, we expect the level of house buyers to remain stagnant. 

“However, it’s clear that people still want to sell their homes and there are properties available for those looking to move. While first time buyers are taking advantage of this situation, those hoping to secure a property may well find the market is leaning in their favour, as the number of sales agreed per branch return to the level seen at the start of 2018. Although sellers are usually keen to hold off until they secure the right price, when the market is slow, they are typically more willing to negotiate. After all, when demand falls, and supply remains the same, it’s a buyers’ market.”

First Time Buyer Numbers Increased Across UK in Q4 2018

Published On: February 28, 2019 at 10:01 am

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First time buyer numbers increased across all parts of the UK in the fourth quarter (Q4) of 2018, according to the latest Regional Lending Trends report from UK Finance.

The trade body assessed the trends covering member mortgage lending in regions of the UK in Q4 and the whole of 2018. The data includes first time buyers, homeowners, home purchases and remortgaging in the residential markets of London, Scotland, Wales and Northern Ireland.

London

11,000 new first time buyer mortgages completed in the capital in Q4 2018, which is 5.8% more than in Q4 2017. The £3.2 billion of new lending was up by 7.4% year-on-year. In 2018 in total, 42,800 new first time buyer mortgages completed – up by 0.5% on 2017. The £12.6 billion of new lending was 2.6% higher on an annual basis.

There were 7,400 new home mover mortgages in Q4 – down by 1.3% on the same quarter of the previous year. The £3.1 billion of new lending was up by 3.3%. In 2018, 28,800 new home mover mortgages were recorded, which is 5% fewer yearly. The £12.0 billion of new lending was down by 1.9% on 2017.

In London, 15,000 new homeowner remortgages completed in Q4 – 2.7% more than in Q4 2017. The £4.6 billion of remortgaging was up by 1.8% year-on-year. Overall in 2018, 60,400 new homeowner remortgages completed, which is up by 6.2% annually. This is the highest annual number of remortgages in the capital since 2008, when this figure stood at 111,900. The £18.8 billion of remortgaging was up by 8.3% on 2017.

Northern Ireland

There were 2,900 new first time buyer mortgages completed in Northern Ireland in Q4 – up by 11.5% on the same quarter of the previous year. The £0.31 billion of new lending was 19.2% more on an annual basis. In 2018, 10,500 new first time buyer mortgages were recorded, which is 9.4% more than in 2017. This is the highest annual number of first time buyer mortgages in Northern Ireland since 2004, when this figure stood at 10,600. The £1.1 billion of new lending was up by 14.6% year-on-year.

1,900 new home mover mortgages completed in Q4, which is up by 5.6% on the same quarter of 2017. The £0.26 billion of new lending was 13% higher year-on-year. In 2018, there were 6,600 new home mover mortgages – 6.5% more annually. This is the highest annual number of home mover mortgages since 2007, when the figure was 12,700. The £0.9 billion of new lending was 9.9% higher on the previous year.

2,600 new homeowner remortgages were completed in Q4 – 18.2% more than in Q4 2017. The £0.28 billion of remortgaging was up by 21.7% year-on-year. In 2018, 9,500 new homeowner remortgages were recorded, which has risen by 11.8%. This is the highest annual figure since 2009, when it stood at 10,100. The £1.0 billion of remortgaging in 2018 was 14.8% higher on an annual basis.

First Time Buyer Numbers Increased Across UK in Q4 2018

Scotland

9,000 new first time buyer mortgages completed in Q4, which is up by 5.9% on the same quarter of the previous year. The £1.07 billion of new lending was 9.2% higher year-on-year. In 2018, there were 34,100 new first time buyer mortgages – 3.1% fewer than in 2017. The £4.0 billion of new lending was up by 2.0% on an annual basis.

There were 9,000 new home mover mortgages in Q4 – 2.3% more than in Q4 2017. The £1.46 billion of new lending was 5.8% higher yearly. In 2018, 34,300 new home mover mortgages were completed – down by 0.9%. The £5.5 billion of new lending was up by 1.5% on 2017.

9,600 new homeowner remortgages were completed in Q4, which is up by 14.3% on an annual basis. The £1.21 billion of remortgaging was 16.3% more on Q4 2017. In 2018, there were 35,400 new homeowner remortgages – up by 11%. This is the highest annual number since 2011, when it was 36,400. The £4.5 billion of remortgaging was 13.8% higher annually.

Wales

There were 4,800 new first time buyer mortgages in Q4, which is up by 4.3% on the same quarter of 2017. The £0.58 billion of new lending was up by 7.4%. In 2018, 16,800 new first time buyer mortgages were recorded – an increase of 1.2% on 2017. This is the highest annual level of first time buyer mortgages since 2006, when 16,900 were recorded. The £2.0 billion of new lending was up by 4.1% year-on-year.

4,400 new home mover mortgages completed in Wales in Q4, following a 2.3% rise on Q4 2017. The £0.69 billion of new lending was up by 6.2%. In 2018, there were 15,800 new home mover mortgages – 0.6% more than in the previous year. This is the highest number of home mover mortgages in Wales since 2007, when 25,600 were seen. The £2.5 billion of new lending was 4.7% higher on an annual basis.

5,400 new homeowner remortgages were completed – up by 22.7% on the same quarter of 2017. The £0.67 billion of remortgaging was 28.8% higher yearly. In 2018 in total, 20,100 new homeowner remortgages were recorded – 12.3% more year-on-year. This is the highest annual number of remortgages since 2008, when 38,600 completed. The £2.4 billion of remortgaging was up by 16.3% on 2017.

Comments

Nick Chadbourne, the CEO of conveyancing panel manager LMS, says: “Remortgaging continues to be the preferred route for many homeowners looking to save on their monthly payments. Similar to last quarter, London houses the bulk of regional remortgage lending in the UK, with £4.6 billion taking place. However, Scotland is where remortgage activity is proving most popular and is in double-digit growth. Last quarter showed a 13.6% year-on-year rise and today’s result shows a similar amount of activity.

“LMS data shows that 38% of these borrowers in December opted for a five-year fix as they finished their two-year deals. These longer-term fixed deals are providing certainty for borrowers during ambiguous times, as they choose to lock in during this current low interest rate environment.”