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Em Morley

Just 25% of Young Adults will Own a Home by 2025

Published On: November 17, 2015 at 3:55 pm

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Categories: Property News

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Around 60% of 20 to 39-year-olds in England will live in private rental homes by 2025, with just 26% owning their own property, according to new research.

Just 25% of Young Adults will Own a Home by 2025

Just 25% of Young Adults will Own a Home by 2025

It is claimed that generation rent will continue to find it difficult to buy a home and are likely to be older than previous generations before they can get onto the property ladder, says the report from PwC. The firm has analysed data on the housing market from the summer.

It believes that high house prices and deposits, alongside rising interest rates, will put young adults at risk of being priced out of the market.

The biggest shift in lifestyle is expected amongst 25 to 34-year-olds, with two-thirds of households living in the private rental sector by 2025, compared with 48% in 2013. In the 35 to 44 age range, a third will be renting in ten year’s time, compared to 24% in 2013. Among 45 to 54-year-olds, the number is expected to increase from 15% to 21%.

Within the 20 to 39 category, just 26% will own their home by 2025, down from 38% in 2013.

The older generations that have recently benefited from the huge rise in home values will mostly be protected from these trends, believes PwC. Three-quarters of over-55s own the home they currently live in and it is expected that this will be the same in 2025.

Senior Economist at PwC, Richard Snook, says the study highlights the scale of the challenge facing young adults. He insists that the continuous rise of house prices, which has much exceeded wage growth, is fundamentally affecting the way people live. He believes that policy must be changed to adapt to the differences in tenure.

He explains: “This could include encouraging a better quality of private rented accommodation, including longer tenure periods, and more rental properties designed for families.

“Demand for housing in the UK has outstripped supply for more than two decades. Changing the outlook for generation rent will require us to build more houses than needed just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”1

Our recent report on buy-to-let mortgages reveals that competition is mounting amongst lenders hoping to attract new investors. Read more here: /buy-to-let-mortgage-market-is-thriving/

Moneyfacts has found that the average rate on a two-year fixed rate buy-to-let mortgage has dropped to 3.26% from 3.63% a year ago and 5.23% in 2010. The typical rate for a five-year fixed rate loan has fallen to 4.06% compared to 4.33% last year and 6.12% five years ago.

The amount of fee-free buy-to-let mortgages has doubled in the past 12 months, standing at 130.

It appears that a vicious circle of supply and demand has formed. But will this continue?

1 http://www.theguardian.com/money/2015/nov/17/generation-rent-young-adults-housing-ladder-2025

 

UK house prices rise 6.1% in year

Published On: November 17, 2015 at 2:21 pm

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Categories: Property News

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Property prices increased by 6.1% in the twelve months to September 2015, according to the latest data released by the Office for National Statistics.

This represented a rise from the 5.5% recorded in August and 5.2% in July, bringing the average house price in the UK to £286,000.

Slowdown

However, this is still much slower than one year ago, when prices were rising by in excess of 12%. What’s more, the results differ from those revealed in a recent survey from the Halifax and the Nationwide respectively, with these surveys indicating prices rose by just 8.6% and 3.8% respectively.[1]

The Office for National Statistics figures indicate that prices rose mostly in Northern Ireland (10.2%) and the East of England (8.4%).

By region, house prices were found to have risen by the following amounts over the course of the year:

Regional House Prices
Region Annual % change Average house price
UK 6.1% £286,000
England 6.4% £299,000
Wales 1.1% £175,000
Scotland 1.1% £199,000
Northern Ireland 10.2% £162,000
North East England 1.8% £158,000
North West 4.2% £184,000
Yorks and Humber 4.6% £186,000
East Midlands 3.6% £196,000
West Midlands 4.5% £207,000
East 8.4% £309,000
London 7.2% £531,000
South East 7.4% £359,000
South West 6% £263,000

[1]

UK house prices rise 6.1% in year

UK house prices rise 6.1% in year

Uncertain future

John Hawksworth, chief economist of PricewaterhouseCoopers, noted that house price inflation is now running at twice the pace of average earnings. He said, ‘the ongoing rise in house prices reinforces our projections that, by 2025, only around a quarter of 20-39 year olds in England may be owner occupiers, compared to around three quarters of over-55 year olds.’[1]

In addition, former chairman of RICS, Jeremy Leaf, believes that the housing market is in the process of re-energising itself. Leaf commented that, ‘with the average property price in London now £531,000, unless you earn way above the national average salary, you have precious little hope of being in a position to buy.’[1]

‘Generation Rent is being left out in the cold: they have aspirations to buy but are being pushed further away from their goal,’ he added.[1]

[1] http://www.bbc.co.uk/news/business-34842248

 

Buy-to-Let Mortgage Market is Thriving

Published On: November 17, 2015 at 12:51 pm

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Categories: Finance News

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Demand for buy-to-let mortgages is booming, as confidence in the sector as an investment continues to grow and rents rise, according to data analyst Moneyfacts.co.uk.

Buy-to-Let Mortgage Market is Thriving

Buy-to-Let Mortgage Market is Thriving

Mortgage lenders are therefore taking advantage of soaring demand and are competing in an attempt to attract new investors.

Figures from Moneyfacts reveal that lenders are doing all they can to entice new borrowers. The average rate has dropped significantly, while the amount of deals with no arrangement fee has more than doubled in just 12 months.

Finance Expert at Moneyfacts, Charlotte Nelson, comments on the findings: “The BTL [buy-to-let] market is clearly booming, with rents at a high and BTL mortgage rates dropping to historic lows, there is great potential for prospective landlords.

“The finding that the average two-year fixed rate has fallen by 0.37% in just one year is particularly good news for older borrowers who are looking to access their pension pots to invest in bricks and mortar.

“However, the Bank of England has recently gained new powers to regulate the buy-to-let market, which may mean that the end is nigh for these low-cost deals. Potential landlords looking for a fixed rate should therefore act fast to ensure they are not disappointed.”

She continues: “Future legislative changes to the BTL market could also mean potential profits will fall, so investors need to keep an eye on any announcements to ensure BTL will still be profitable for them.

“The increase in deals with no fee is a sign that BTL lenders are trying to diversify and offer borrowers more choice than ever before. However, borrowers still need to weigh up the true cost of a mortgage to ensure the best deal is secured. Anyone thinking about entering this sector would be wise to seek the advice of an independent financial adviser to see if BTL really is the best place for their investment.”1

If you are considering becoming a buy-to-let landlord, or have rental properties already, keep up to date with the latest landlord law, finance news and goings on in the property market on LandlordNews.co.uk.

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/moneyfacts-buy-to-let-mortgage-market-is-booming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Most-common property deal breakers

Published On: November 17, 2015 at 12:14 pm

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Categories: Property News

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Aggressive sellers. Lousy letting agents. Nightmare neighbours. These are just some of the biggest deal-breakers highlighted in a new survey.

Data from a poll of UK adults by property guide website SellingUp.com reveals that 42% of potential home buyers would pull out of a deal due to a rude seller. 28% said that they would punish the vendor by reducing their original offer.

Costly cause

An unpleasant or annoying estate agent was found to be as costly for sellers, with 35% considering this a reason to call-off a deal, with 19% this represented grounds for making a lower offer.

The stereotypical neighbour from hell was a large for making would-be buyers pull out of a deal, with 70% citing this as the case.

However, this was not top of the list. 77% said poor security was the main potential deal-breaker.

The top-ten reasons by percentage for potential deals falling through were found to be:

  • Poor security (77%)
  • A bad energy rating (75%)
  • Noisy neighbours (70%)
  • Bad mobile phone signal (53%)
  • Pests (44%)
  • Messy garden (42%)
  • Rude seller (42%)
  • Aeroplane noise (41%)
  • Being next door to a cemetery (31%)
  • Located on an embarrassing street name (25%)
Most-common property deal breakers

Most-common property deal breakers

Informed decisions

‘The aim of the survey was to remind sellers to think like a buyer when marketing their property and try to sort out as many flaws as they can,’ remarked Oliver Lewis, SellingUp.com’s research manager ‘Also, we wanted to help buyers make better informed decisions when purchasing, especially for investment and think about the less high profile issues that could affect resale value.’[1]

‘When sellers are getting ready to put their property on the market, they are always being told to tidy up and make the place presentable, but there are many more factors they need to consider if they want to attract the widest number of buyers,’ he continued.[1]

Lewis also said that, ‘clearly with some ingrained issues like aereoplane noise and a bad mobile signal there is little or nothing the vendor can do. They simply have to hope that the buyer doesn’t notice or care.’[1]

‘On other points like evidence of mice, badly overgrown gardens or poor home security there is much greater scope to take action in advance. Hiring a pest control company, a gardening firm or a security specialist to resolve any problems might cost a few hundred pounds but could save them thousands when selling.’[1]

[1] http://www.propertyreporter.co.uk/household/could-noisy-neighbours-be-a-property-deal-breaker.html

 

 

70,000 per year can’t afford market housing

Published On: November 17, 2015 at 10:32 am

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Categories: Property News

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Worrying new research conducted by estate agents Savills suggests that in every year for the next five years, 70,000 new households in England will be unable to afford to buy or rent market housing, unless they are assisted.

This indicates that 350,000 households will require some kind of sub-market housing by 2020.

Targets

According to the report, owner occupation remains the tenure of choice for the majority of people. The Government has given a target of delivering 200,000 new homes a year over the course of the current Parliament, with an ultimate goal of reversing the decline in home ownership.

Savills warns however that a consequence of this plan could be a fall in affordable housing numbers for the very lowest income households.

Data from the report analyses the cost of buying or renting a home in the current market and assumes 30% of gross household income is spent on housing. Taking this into account, at least 70,000 new low-to-middle income households per year will be unable to live in market housing.

The agency claims that the nature of households that are unable to access market housing varies hugely across the country, with the problem at its worse in London and the South East.

70,000 per year can't afford market housing

70,000 per year can’t afford market housing

London falling

In London, there are concerns that households that earn an average income of 60,00 per annum and still not be able to afford market housing.

Chris Buckle of Savills’ research team, said that, ‘there can be no question that we need to boost housebuilding volumes, but these new homes need to be built across a variety of tenures to put homes within reach of those in greatest need.’[1]

‘Our concern is that new policy will result in a greater shift from sub-market rental products towards more expensive shared ownership and Starter Homes accessible only to those on middle incomes,’ he added.[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2015/11/70-000-new-households-a-year-cant-afford-to-buy-or-rent-says-agency

 

 

 

Reduced Tax Relief is Major Reason for Landlords Looking to Sell

Published On: November 17, 2015 at 9:35 am

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Categories: Finance News

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The Government’s reduction in buy-to-let mortgage interest tax relief is a major reason for half of all landlords currently thinking of selling their rental properties, according to a recent sentiment survey from Your Move and Reeds Rains.

Reduced Tax Relief is Major Reason for Landlords Looking to Sell

Reduced Tax Relief is Major Reason for Landlords Looking to Sell

The tax cut, to the basic rate of 20%, was announced in the summer Budget. The study of over 1,200 landlords revealed that at present, 9% of landlords think that now is a good time to sell, with the tax changes affecting their decision more than any other factor.

Many landlords believe that renting out a property will become much less profitable when the reforms are gradually enforced from April 2017. As a result, they are now considering leaving the private rental sector.

This lack of confidence dampens the positivity of 31% of landlords who believe that now is a good time to purchase buy-to-let properties. In total, two-fifths of UK landlords (44%) think that investing in the sector is more complicated than it was six months ago.

This sentiment is due to stricter regulation, also introduced in the Budget, which includes the requirement for landlords to check the immigration status of prospective tenants. Around a fifth (19%) of landlords are daunted by this task and say they feel unequipped to let their properties without a letting agent to manage their investments.

Almost a quarter of respondents (24%) think the legislation surrounding the lettings sector has become more confusing, with more than one in ten (11%) stating that they don’t fully understand current regulations.

It is clear that these changes in landlord law are hitting investors’ confidence; general disenchantment with the lettings industry was a key factor for 23% of landlords that are looking to sell.

Director of Your Move and Reeds Rains, Adrian Gill, says: “Landlords could be forgiven for feeling a little deflated at the moment and it’s worrying to see this may motivate many to reconsider their investment. The Government’s tax changes appear to be making investing in buy-to-let less attractive because of the seemingly smaller profits margins on offer in the future.

“If a tenth of landlords do decide to leave the industry, this would seriously shrink the number of properties available for tenants. At a time when tenant demand is only rising, shorter supply will only translate into increased rents. This may mean landlords are underestimating the likely pace of future rent rises.”

He believes: “The Government needs to cut the red-tape involved in providing homes for renters if they hope to maintain a healthy supply of rental properties. With the Bank of England (BoE) keeping a wary eye on the buy-to-let market, further regulatory interference may only make landlords’ and tenants’ lives harder. We need landlords to stay in the market and invest further in the sector, in order to match future demand.”1 

Are you considering leaving the sector? If so, what are the reasons for this?

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/reduced-tax-relief-is-top-worry-for-landlords-thinking-of-selling-up