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Millennials are Less Likely to Support the Help to Buy Scheme

Published On: November 23, 2018 at 10:29 am

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Millennials are some of the least likely Britons to support the Help to Buy scheme, amid concerns that it is pushing house prices up, according to a poll by property investment platform British Pearl.

The survey of more than 2,000 Brits found that 31.5% did not support the Help to Buy scheme, which is designed to help first time buyers get onto the property ladder, with many believing that it has actually made housing less affordable.

Of the third who were opposed to the Help to Buy scheme, 37.5% blamed it for house price inflation, while 35.8% argued that the Government should instead use cash “to build more homes”.

More than a quarter (26%) of those who disagreed with Help to Buy claimed: “It’s unnecessary and those who can’t afford to buy should rent”, while 24.3% believed: “The Government shouldn’t interfere in the market.”

Millennials are Less Likely to Support the Help to Buy Scheme

Millennials are Less Likely to Support the Help to Buy Scheme

The poll found that millennials were among the least likely to be in favour of the Help to Buy scheme, while older respondents were actually more likely to support it.

Just 59.8% of 16-24-years-old supported the scheme, along with 66.7% of 25-34-year-olds. However, 70.1% of 45-54-year-olds did, as well as 73.1% of the over-55s.

The responses show that, generally, the younger someone is, the less likely they are to trust the Help to Buy scheme, suggesting that one of the main demographics that Help to Buy is supposed to appeal to are the least likely to feel that it would benefit them.

The research also revealed that people in Norwich were the least likely to be in favour of the scheme, with just over half (55.1%) supporting it. However, in Bristol, more than three-quarters (75.9%) said that they did support Help to Buy.

Income also affected people’s perception of the scheme, with those earning between £35,001-£45,000 being the most likely to support it (74.3%), while those taking home between £65,001-£75,000 being the least likely (60.9%).

Since the first phase of the Help to Buy scheme was introduced in April 2013, the average UK house price has soared by 36.7%, from £170,335 to £232,797 in August this year.

Experts have argued that the scheme has caused prices to become inflated, amid intensified competition from buyers who have more cash to spend.

James Newbery, the Investment Manager at British Pearl, responds to the findings: “While there were certainly good intentions behind Help to Buy, and it has helped people onto the ladder, our poll proves a significant portion of Brits are still to be sold on the scheme.

“Its merits are either not being communicated effectively enough to generation rent, or people are beginning to believe the scheme has become part of the problem, rather than the solution.”

He believes: “Public opinion is becoming jaded by a persistent lack of stock and ever-increasing property prices, so something clearly needs to be done to address Britain’s housing crisis and the country’s perception of how the Government is handling it.

“Millennials — who form part of the key demographic Help to Buy was designed to give a leg-up to — clearly still have a bone to pick with what’s been laid on the table for them in terms of housing options.”

Newbery adds: “The digital revolution has benefited those with the cash to spend, by offering them unitised ownership and, in turn, increasingly diversified portfolios. Yet it is young people who people who feel more disconnected from property than ever, as platforms like British Pearl attempt to bridge that divide.”

It may be disappointing for those stuck in rental housing to learn, therefore, that the Help to Buy scheme has been extended until 2023 by the Government.

First Time Buyer Levels in London at the Highest Rate since 2015

Published On: November 23, 2018 at 10:00 am

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First time buyer levels in London have hit the highest rate since 2015, according to fresh analysis of the mortgage market by UK Finance.

The organisation has taken a close look at the capital, as well as Northern Ireland, Scotland and Wales. It has assessed homeowner mortgages, as well as remortgaging and first time buyer levels over the third quarter (Q3) of the year.

London

In Q3, 11,700 first time buyer mortgages were completed in London, which is up by 2.6% on Q3 2017. This £3.55 billion of new lending was 6% higher on an annual basis. UK Finance found that the average first time buyer in the capital was 32-years-old and had a gross household income of £70,000.

8,100 new home mover mortgages were completed over the same period, some 4.7% fewer than in Q3 last year. The £3.49 billion of new lending was up by 0.3% year-on-year. The average home mover in London was 37-years-old and had a gross household income of £95,000.

Some 15,200 new homeowner remortgages were completed in the capital in Q3, which is 3.4% higher than in the same quarter of 2017. The £4.76 billion of remortgaging was 4.6% more on an annual basis.

Jackie Bennett, the Director of Mortgages at UK Finance, comments: “London’s mortgage market remained resilient in the third quarter of this year, despite an uncertain economic environment.

“The number of first time buyers in the capital reached its highest level in three years, boosted by schemes such as Help to Buy. The recent extension of the scheme until 2023 will help even more people get a foot on the housing ladder in the years ahead.

“Remortgaging continues to be strong, reflecting the large number of fixed rate loans coming to an end, as well as customers’ desire to lock into new competitive rates.”

Northern Ireland 

First Time Buyer Levels in London at the Highest Rate since 2015

First Time Buyer Levels in London at the Highest Rate since 2015

First time buyer levels in Northern Ireland were also up over Q3, with 2,700 new mortgages to the group, some 3.8% more than in Q3 2017. The £0.28 billion of new lending was 7.7% higher annually. The average first time buyer in Northern Ireland was 30-years-old and had a gross household income of £33,000.

1,800 new home mover mortgages were completed in Q3, which is up by 5.9% on the same quarter of last year. This £0.24 billion of new lending was 4.3% more year-on-year. The average home mover was 39-years-old and had a gross household income of £48,000.

There were 2,200 new homeowner remortgages in Northern Ireland in Q3, which is 4.8% higher in the same quarter a year earlier. The £0.24 billion of remortgaging was 9.1% more on an annual basis.

Derek Wilson, the Chair of UK Finance’s Northern Ireland Mortgage Committee, says: “The Northern Ireland mortgage market continues to show steady growth in house purchase activity.

“Lending to first time buyers remains the largest sector by value, as borrowers take advantage of what continues to be the most affordable region in the UK.

“These figures underline the importance of boosting housing supply to meet this growing demand.”

Scotland 

9,200 new Scottish homeowner remortgages completed in Q3, some 13.6% more than in the same quarter of 2017. The £1.18 billion of remortgaging was 18% higher year-on-year.

First time buyer levels in Scotland were not as strong as in London or Northern Ireland, however, as 8,900 mortgages were completed in Q3, some 5.3% fewer than in the same quarter of last year. This £1.04 billion of new lending was down by 1% yearly. The average Scottish first time buyer was 29-years-old and had a gross household income of £35,000.

There were 9,500 new home mover mortgages completed in Scotland in Q3, which is down by 1% on Q3 2017. The £1.53 billion of new lending was the same year-on-year. The average Scottish home mover was 39-years-old and had a gross household income of £51,000.

The Chair of UK Finance’s Scotland Mortgage Committee, Douglas Cochrane, comments: “Scotland saw strong growth in remortgaging activity this quarter, as many fixed rate loans come to an end and customers continue to shop around for attractive deals.

“The number of first time buyers has softened slightly compared to the same quarter last year, while home mover purchases remain steady.”

Wales

First time buyer levels also dropped in Wales in Q3, as 2.3% fewer mortgages were completed (4,300). The £0.52 billion of new lending to this group was unchanged year-on-year. The average Welsh first time buyer was 29-years-old and had a gross household income of £35,000.

4,300 new home mover mortgages were completed in Wales in Q3, matching the level recorded in the same quarter of 2017. This £0.68 billion of new lending was 3% higher on an annual basis. The average home mover in Wales was 39-years-old and had a gross household income of £48,000.

Some 4,900 new Welsh homeowner remortgages were completed during the period, which is 2.1% more on an annual basis. The £0.61 billion of remortgaging was 8.9% higher on Q3 last year.

Julie-Ann Haines, the Chair of UK Finance’s Wales Mortgage Committee, explains the data: “The Welsh mortgage market has remained steady, with overall house purchases broadly in line with the same period last year. Remortgaging has continued to grow, as many existing loans mature and homeowners take advantage of a competitive market to lock into attractive deals

“The number of first time buyers is down slightly amid ongoing economic uncertainty, while the buy-to-let market has also softened due to the impact of recent tax changes. However, the overall picture of the market is consistent with the last couple of years and it would appear that this trend is set to continue in the short-term.”

Deposit Disputes Remain Low, Despite Higher Number of Rentals

Published On: November 23, 2018 at 9:04 am

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Fewer than 1% of tenancies in England and Wales ended with deposit disputes in the 12 months to March 2018, according to data from the Tenancy Deposit Scheme (TDS).

The scheme, which is one of the three Government-approved protection services, used its own data, plus freedom of information requests regarding the other two schemes.

The research found that, of the 3.74m deposits that were protected during the year to March, just 0.85% (31,865) resulted in disputes. This is up slightly from 0.83% last year.

However, this is the eighth consecutive year that fewer than 1% of all tenancies ended in deposit disputes, despite the rising number of rentals on the market.

By comparison to this year’s figure, 924,181 deposits were protected in England and Wales in March 2008.

The TDS’s data found that its insured scheme had a dispute rate of 1.14%, compared to 0.49% for its custodial service.

A total of £4.2 billion was held in deposit protection schemes as of March 2017, across the TDS, The Deposit Protection Service (The DPS) and mydeposits. The average deposit value was £1,100.

The TDS’s adjudications process on custodial deposits took just 3.55 days to resolve, compared to 21 at The DPS and 27 at mydeposits.

It took the TDS 14.79 days to resolve disputes in its insured scheme, compared with 26 at the two other organisations.

The most common reason for deposit disputes among TDS users was cleaning, at 54% of cases, followed by damage (49%), decoration (31%), rent arrears (20%) and gardening (16%).

Steve Harriott, the Chief Executive of the TDS, says: “As the private rented sector and the need for robust deposit protection continues to grow, as it has done over the last decade and more, it’s important to take stock of where we are and look for trends.

“Despite the number of tenancy deposits protected increasing by over 300% in the last ten years, the rates of disputes have remained regularly below 1%. That means the overwhelming majority of tenancies end in agreement between the tenant and the landlord or letting agent about how the deposit is awarded.”

He adds: “It’s unsurprising to see cleaning remain as the number one reason for disputes, due to its subjectivity; what might seem clean to one party could be viewed differently by another.”

We remind all landlords, letting agents and tenants to understand their rights and responsibilities surrounding tenancy deposits. Read our helpful guide for free here: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-tenancy-deposits-2/

Stamp Duty Relief Continues to Help First Time Buyers onto the Ladder

Published On: November 22, 2018 at 10:38 am

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Stamp Duty relief is continuing to help first time buyers take their first steps onto the property ladder, according to HM Revenue & Customs’ (HMRC’s) latest Quarterly Stamp Duty Land Tax Statistics, covering the third quarter (Q3) of the year.

Property transactions, both residential and non-residential, rose by 11% to 307,100 between Q2 and Q3, but were 8% lower on an annual basis. This is partially due to the devolution of Stamp Duty to Wales in April 2018, HMRC notes.

Q3 2018 Stamp Duty receipts totalled £3.2 billion, which is 14% higher than in Q2, but 9% lower than in Q3 2017. Residential receipts rose by £364m on Q2, while non-residential receipts were up by £39m.

Stamp Duty Relief Continues to Help First Time Buyers onto the Ladder

Stamp Duty Relief Continues to Help First Time Buyers onto the Ladder

58,800 property transactions claimed first time buyer Stamp Duty relief in Q3, making a total of 180,500 claims since the relief was introduced. The estimated total amount saved for first time buyers is £426m.

91% of all Stamp Duty transactions in Q3 were for residential properties. Between Q2 and Q3, residential sales increased by 13% (31,700) to 279,500, but were down by 8% (23,200) on transactions recorded in the same period last year.

Two-thirds of residential transactions were liable for Stamp Duty – the lowest proportion it has been since Q1 2014. This reflects recent changes in Stamp Duty rates; liable transactions rose in Q3 2016 due to the new rates of tax on additional properties, but dropped in Q4 2017 due to first time buyer relief raising the liable threshold for this type of buyer to £300,000.

Shaun Church, the Director at mortgage broker Private Finance, comments on the statistics: “The Stamp Duty exemption has arguably been one of the most successful initiatives to get more buyers onto the housing ladder, providing a financial lifeline to almost 200,000 first time buyers and helping them save a staggering £400m to date.

“If the Government is committed to fixing our housing market, Stamp Duty relief shouldn’t end, however, with first time buyers. We urge the Government to turn its attention to last time buyers, as too many would-be downsizers remain in their family homes unwilling to move, due to the hefty tax bill they would incur.

“Encouraging these homeowners to move to smaller and more suitable homes would unglue the housing market, and unlock a supply of properties for prospective buyers further down the chain, helping to rebalance the supply of UK property in relation to demand.”

Kevin Roberts, the Director of Legal & General Mortgage Club, has the same opinion: “The mortgage market may well be in a strong position, however, we continue to see a property market telling the same story – one of stagnation. Whilst there was a slight uplift, ongoing uncertainty around Brexit and barriers like Stamp Duty are clearly having an impact, forcing many existing homeowners to improve, not move.

“Last month’s Budget was certainly a step in the right direction, with more good news for first time buyers with the Stamp Duty exemption to Shared Ownership properties, but we can’t forget about those higher up the property ladder. Extending this break to last time buyers would free up larger houses for growing families, providing the next generation of homebuyers the opportunity to step onto or even up the property ladder.”

Letting Agents Offering Guaranteed Rent Caught Out by Subletting

Published On: November 22, 2018 at 9:50 am

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The Advertising Standards Authority (ASA) has upheld two complaints against letting agents that offered guaranteed rent, as it was unclear that they became the tenant and subletted the properties.

The outcome of the investigation suggests that any letting agent following this model must detail the subletting arrangement in any marketing of a property.

The cases were both treated individually, despite the firms – Reliance Property Management Specialists and Smartinvest Capital, trading as Victoria Knight – both being in east London and under the same ownership.

On its website, Reliance said that it offered guaranteed rent 365 days per year, guaranteeing its landlords full monthly rental payments, even when the property is empty.

The complainant claimed that the guaranteed rent statement was misleading, as it suggested that the rent would be guaranteed in all circumstances. They added that the advertisement did not make clear the significant limitations.

Reliance told the ASA that it acted as the tenant, and then effectively sublet the property.

A rent recovery insurance policy allowed the letting agent to claim for unpaid rent where the tenant had defaulted. It also provided cover for legal costs involved in pursuing a tenant.

Two landlords told the ASA that they had continued to receive rent when their properties were empty. However, the ASA said that consumers would not understand from the advert that the guaranteed rent was based on Reliance becoming the tenant and subsequently subletting the property.

It warned that this was material information likely to cause consumers to take transactional decisions that they would not otherwise have taken.

There were also terms and conditions for the arrangement, but a copy of the full terms and conditions was not available for landlords to view on the website. For instance, one term was a limitation on the guaranteed rent for landlords if the property was uninhabitable.

In the case of Victoria Knight, its website read: “We are one of the few letting agents in the country who offer rent guarantee with professional working tenants.

“Our rent guaranteed service offers the assurance of a fixed monthly rental income without all the hassles involved in being a landlord.”

The challenge from the complainant was the same as in the Reliance case.

Again, the ASA ruled that, because Victoria Knight did not make it clear that the agent became the tenant and sublet the property, its rent guarantee claims were misleading.

Both sets of adverts have been banned.

For landlords struggling to understand the difference between a guaranteed rent scheme and rent guarantee insurance, read this helpful guide on Just Landlords’ website: https://www.justlandlords.co.uk/news/rent-guarantee-insurance-guaranteed-rent-schemes/

Over-55s: The Generous Generation

Published On: November 22, 2018 at 8:58 am

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  • Three out of four over-55s have either already helped, or plan to help out, their children financially
  • 78% of over-55s are worried that, by gifting now, they might run into financial trouble themselves later down the line
  • More than one in five over-55s will provide cash to grandchildren

Average handouts to children and grandchildren

For children, their parents give out an average of nearly £17,000, whilst grandchildren can expect (before inheritance), on average £11,300, according to a study by Key. The money is thought to be given to help with particularly large financial concerns, such as student debt and housing deposits.

Nearly half (46%) of homeowners over the age of 55 have already helped their children out financially, and another 30% plan on doing so. This equates to about 8.6m homeowners helping out the younger members of their families.

Regional focus

Over-55s in the North East are most generous to children, with 94% of grandparents having helped out, or plan to help out, their offspring. For grandchildren, Londoners are most likely to receive financial help, with a total of 34% either planning to, or have already, helped their grandchildren.

Will Hale, the CEO at Key, comments: “The over-55s are truly a generous generation, with many looking to access their housing equity help out their children and grandchildren. Of course, not all over-55s are homeowners and not all can afford to give money, but those who can generally want to.

“Indeed, with more than three out of four planning to help children and one in five helping grandchildren, there is clearly is a real desire amongst this group to support younger generations and a recognition of some of the financial challenges they are facing. Despite recent reports pointing to a growing intergenerational divide, our experience is that families continue to offer financial support when it is needed across the generations.

He continues: “The over-55s have done well out of property wealth growth and many may be benefiting from generous company pension schemes. However, whilst their current financial well-being is enabling them to help out family, there may be worries of over-extending themselves and under-estimating the costs involved in the latter stages of life. Therefore, it is vital that the over-55s seek specialist advice when choosing to access the wealth in their property.”