Three in 10 property purchases fall through

New research from Which? Mortgage Advisers reveals that three in ten (28%) homebuyers have had a house purchase fall through after their offer was accepted, and on average homebuyers were left nearly £3,000 out of pocket as a result.

The survey of 2,000 homebuyers – who bought their home in the previous two years – found that it takes over 4.5 months on average, from starting a property search to having an offer accepted. However, 28% of purchases fell through after that point.

The main reasons for a property purchase falling through were:

  •     The seller decided not to sell their home after all (27%)
  •     The buyer pulled out, as their own property sale had fallen through (21%)
  •     The buyer found somewhere else to buy (21%)
  •     The buyer was ‘gazumped’ (21%)

Of those who had lost money and knew how much they were out of pocket, the average loss was £2,899. This included conveyancing, survey, mortgage valuation or brokerage fees paid and not recovered.

Many homebuyers experience failed transactions due to problems in the ‘property chain’ – the line of buyers and sellers linked together because each is selling and buying a property from another.

For more advice on managing a property chain and keeping things moving, visit Which

Tenant evictions on the rise in England and Wales

The number of households evicted from rental accommodation in England and Wales rose by 5% in the first three months of the year, while the repossession rate for home owners fell to a record low.
Seasonally adjusted figures from the Ministry of Justice show there were 10,732 repossessions of rented homes by bailiffs between January and March 2016, up from 10,253 in the final three months of 2015.
The number of tenants evicted from their homes by bailiffs reached a record high in 2015, according to official figures for England and Wales, which shows that 42,728 households in rented accommodation were forcibly removed.
Housing campaigners blamed welfare cuts and the shortage of affordable homes for the rise in repossessions over the year and more than half the evictions are thought to have been by private landlords.
These figures are echoed by a new report from online letting agent PropertyLetByUs which shows that a quarter of landlords have served an eviction notice to tenants over the last 12 months and 5% have pursued an eviction through the courts. Furthermore, almost half of landlords have also experienced rent arrears over the last 12 months.
‘Landlords are increasingly facing rent arrears, as rent escalation continues to outstrip gross income. They are also facing a financial squeeze due to restrictions on their tax breaks and some may be raising rents to supplement their income. Pushing up rent rises further will put huge pressure on those tenants who are already struggling to pay their rent. We may well see evictions continuing to rise over the next few months,’ said Jane Morris, managing director of PropertyLetByUs.
She pointed out that the statistics highlight the need for landlords to protect their rental income and ensure they carry out thorough references with all new tenants. ‘Times are very tough for many tenants and demand for rental accommodation is soaring in many parts of the UK. Landlords need to extra vigilant when they take on a new tenant. But a few simple checks will help identify if a tenant is in a good financial position or not,’ she added.

Meanwhile, changes to the process of accelerated possession through applying to use High Court Enforcement Officers (HCEOs) to evict a tenant has brought an end the so called seven day eviction which were misleading for landlords as well as increased costs, according to legal experts, Landlord Action.

Source: Property Wire

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Positive sentiment on future house price growth in UK slips to three year low

Household sentiment on future house price growth in the UK has slipped to a three year low, with 23.7% believing that the value of their home has increased over the last month.
Some 4.4% believe that prices have fallen, according to the latest house price sentiment index from Knight Frank and Markit Economics with the reading falling from 61 to 59.7.
Households in the North East perceived that the value of their home fell in June, the first time that households in any English region perceived house prices had fallen since August 2013.
The future HPSI, which measures what households think will happen to the value of their property over the next year, fell to 67.7 in June from 70.3 in May. This is the lowest reading recorded by the index since August 2013.
The gap between sentiment in the North and South of the UK is now wider than at any time since the inception of the index. But some 6.5% of UK households said they planned to buy a property in the next 12 months, up from 5.4% in May and the highest number since August 2015.
‘The decline in the future household sentiment index to a near three-year low coincides with growing uncertainty over the result of next week’s European Union referendum as the debates over the UK’s future step up a gear,’ said Gráinne Gilmore, head of UK residential research at Knight Frank.
‘The proportion of households who expect the value of their home to fall over the next 12 months rose to the highest level in nearly two years, but overall households still expect the value of their property to continue rising in the coming year, despite the uncertainty about the result of the vote,’ she explained.

Source: Property Wire

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Research reveals nearly five million renters at risk

Research reveals nearly five million renters at risk

Results from a survey by YouGov, commissioned by Royal London, reveal almost five million renters in the UK have no plans in place to cover their rent if they became too ill to earn for three months or more, even though recent cuts to housing benefits could leave them at risk.

This is despite the fact that over a quarter of renters in paid employment (27%) said they knew someone who had struggled in this situation.

More than one in three renters in paid employment (34%) admit they don’t know how long they could survive, and six in ten people (60%) who had some idea said they could only survive on their savings for three months or less.  Their first port of call would be to apply for state benefits (53%), followed by reducing their household expenses (47%) and then dipping into their savings (39%).

Worryingly, fewer than one in ten (7%) renters in paid employment have ever consulted a financial adviser. The most common place people turn to for financial advice is their family and friends.

Debbie Kennedy, Head of Protection for Royal London Intermediary, said:

“Renters who assume that housing benefit will be there when they need it could find the reality is very different.  A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly.

“It would be bad enough to be taken ill without the added anxiety of getting behind with the rent and facing possible eviction.  Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better.”

Economists predict over the next ten years the UK will experience falling levels of home ownership and rising levels of private renting.  In ten years’ time, 59% of 20-39 year olds will rent privately, up from 45% in 2013. A further 15% are in social housing, renting from housing associations or local authorities.

Source: Royal London

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Surge in investors buying student property

New data has found that the first quarter of 2016 has seen a surge in investors acquiring student property, to beat the new stamp duty legislation, which comes into force in April 2016.

Research, conducted by The Mistoria Group – student property investment specialists, reveals investors have been flocking to complete their student property purchase by the end of this month, to avoid the 3% stamp duty surcharge coming in for second homes.

The research shows that sales of student property in the North West have leapt by over 30% between January-March 2016, compared with the first quarter of 2015.  More than 50% of student property investors are from the South, while a third are overseas investors.  The remaining 20% of investors are from the Midlands and the North.

Over the last few years, student housing has undergone a significant amount of change, with rising rents and a higher level of expectation from the occupying students, many of whom are looking for high-spec accommodation with luxuries like plasma TVs, Wi-Fi and built-in white goods.  The removal of the cap on student numbers have also triggered many universities to anticipate an increase in enrolment over the coming years, which is driving demand for more high quality, affordable student accommodation.

Mish Liyanage, managing director of The Mistoria Group comments: “We have seen a rush of investors wanting to purchase student property over the last quarter and we anticipate that demand for student property will continue to grow significantly in 2016 and beyond.

Since the birth of the buy-to-let mortgage 18 years ago, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK.

Over the last five years, student properties in the North West have generated yields in excess of 13% and geared yield in excess of 35% in Salford and Liverpool.  Our research shows that the North West provides greater returns than any other city in the UK. This is fuelled by the massive regeneration taking place in Manchester, with the proposed High Speed 2 (HS2) high-speed railway between London Euston and the North West to be completed in the next 15-20 years.

A HMO (House in Multiple Occupation) property can provide an 8% minimum cash rental yield and a typical 13% total cash yield, including 5% capital appreciation.  The average gross cash rental yields for the student property sector in the North West of England were 8.1% for the 2015.”

Extended mortgage age limits show changing property culture

Changes in policies announced by leading lenders including Halifax and Nationwide to increase the maximum age limits on mortgage lending mean that borrowers could find it easier to get on the property ladder.

Many older borrowers have struggled to secure a mortgage into their pension years, even with guaranteed final-salary pension income.

Despite the default retirement age being phased out in 2011, and the rise in people living and working for longer, most lenders have stuck to the state pension age.

The announcements in May that Halifax and Nationwide were raising upper age limit to 80 and 85 respectively has been broadly welcomed by the property industry.

Mortgage lending in general surged just before March as second home buyers rushed to beat the stamp duty increases. The British Bankers Association said lending rose to £17.1 billion in March 2016. But overall mortgage lending remains with historically low levels.

The move to raise the threshold of the age limit offers property buyers extra flexibility and is believed it will help homeowners who have not cleared interest-only mortgages, and older ‘silver splitter’ couples divorcing and looking for new homes.

New property investment platform launched to bring investors and property developers together.

New property investment platform launched to bring investors and property developers together.

A new online property investment platform, InvestSure, has been launched to bring together professional investors and property developers to help address the chronic lack of available finance in the UK property market.

InvestSure says it will allow property developers to access a diverse range of funding for projects, where previously traditional banks have been unable to provide it. InvestSure explains that better access to funding will be a vital component in helping Britain solve the housing crisis.

InvestSure differs from ‘peer-to-peer’ entrants into the space in that it is only open to professional investors, reducing risk and making it the first ‘pro-to-pro’ network of its kind. The platform has been launched to address the increasing two-tier nature of the UK property development market, in which small to medium sized developers are struggling to acquire funding on favourable terms thanks to tight banking restrictions.

Developers using the site will benefit from being able to quickly and efficiently secure funding for projects without being dependent on a small number of investors for equity, thus retaining greater control and improving margins.

On the other side of the equation, the platform will provide the cash-rich professional investor community with a wide range of attractive investment opportunities at a time when returns are difficult to find elsewhere.

Janine Lewis, CEO and founder of InvestSure, commented: “The UK property market has been seriously dysfunctional for some time. Since 2007, bank lending has been limited to 65% loan-to-cost at best, leaving developers to bridge the gap. This prevents them from moving quickly, and as a result activity has been opportunistic and sporadic. It has also placed an inordinate amount of power in the hands of investors, diminishing profits. The InvestSure platform will rebalance this relationship, allowing developers to gain exposure to numerous investors competing to fund projects, making the process quicker and more efficient.

“This is sorely needed. We are in the midst of a housing crisis, one that cannot be solved by large developers alone. The money is out there: there are plenty of professional investors out there willing and able to fund these projects. InvestSure can connect these two groups together in an efficient, convenient, and mutually beneficial way.”

The InvestSure platforms covers all forms of property investments across the UK, including development projects, assets, land and bonds covering every asset class. Development opportunities are only viewable by investors (not other developers), and investors are able to search and filter opportunities to match their investment profile. Brokers and intermediaries are also able to use the site, splitting fees with InvestSure. Projects can also be funded through syndication.

Until the end of 2016, investors and property developers can become members on the platform free of charge.

Source: Property Wire

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Home-owner house purchase lending in Wales up year-on-year

Home-owner house purchase lending in Wales up 25% year-on-year in first quarter says Council of Mortgage Lenders (CML).

  • Home-owners borrowed £850m for house purchase, down 16% quarter-on-quarter but up 29% year-on-year. They took out 6,600 loans, down 16% on the previous quarter but up 25% on quarter one 2015.
  • First-time buyers borrowed £330m, down 20% on the fourth quarter 2015 but up 22% on the same period last year. This totalled 3,000 loans, down 19% quarter-on-quarter but up 20% year-on-year. The average age of a first-time buyer is now 29 years old.
  • Home movers borrowed £530m, down 12% on the fourth quarter 2015 but up 36% compared to a year ago. This totalled 3,600 loans, down 14% quarter-on-quarter but up 29% year-on-year.
  • Remortgage activity totalled £420m, down 2% quarter four but up 20% compared to a year ago. This came to 3,700 loans, down 3% quarter-on-quarter but up 12% year-on-year

Julie Ann Haines, CML Cymru chair, commented:

The first quarter of the year typically sees a seasonal lending dip, but the year-on-year growth in activity in all lending types is encouraging. That this is the best first quarter performance for all lending types in Wales since 2007 suggests a growth period for the market. With affordability improving this quarter, supported by a generally favourable economic backdrop, we would expect further growth in lending as we go into the summer months.

Wales house purchase and remortgage lending in the first quarter

While seasonal factors generally cause activity to be lower this period, this is the highest number of loans and the most borrowed for house purchase in the first quarter of the year since 2007. This was also the case for first-time buyer, home mover and remortgage activity.

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UK property market boosted by buy-to-let rush in march, official figures show

UK house prices increased by 9% in the year to March 2016, up from 7.6% in the year to February 2016, according to the latest official figures.

House price annual inflation was 10.1% in England, 2.1% in Wales, 6.4% in Northern Ireland but fell by 6.1% in Scotland, taking the average price to £292,000, data from the Office of National Statistics shows.

Annual house price increases in England were driven by growth in London of 13%, followed by 12.2% in the South East and 12.1% in the East of England.

However, excluding London and the South East, UK house prices increased by 5.9% in the 12 months to March 2016.

The data also shows that on a seasonally adjusted basis, average house prices increased by 2.5% between February 2016 and March 2016 and prices paid by first time buyers were 9.7% higher on average than in March 2015. For owner-occupiers prices increased by 8.7% for the same period.

This is the final release of the ONS House Price Index (HPI) which will be replaced by the new UK House Price Index from June 2016.

Richard Snook, senior economist at PwC, explained that buy-to-let investors rushing to complete purchases before the 3% stamp duty charge on additional properties came into effect at the beginning of April has affected the figures.

‘This move undoubtedly drove up demand and prices in March and we would expect demand to soften over the next few months as a result. There are no signs of any Brexit-related slowdown in this month’s figures, although the underlying trends are masked by the effects of the stamp duty change,’ he said.

Randeesh Sandhu, chief executive officer of Urban Exposure, the residential development finance provider, believes that activity is likely to slow down in the coming months following these changes and also in the run up the EU referendum with consumers remaining cautious against the backdrop of a potential Brexit.

‘However, it is clear that demand for housing remains strong and any impact of a Brexit is likely to be a short term trend with activity returning to normal soon after any decision. Therefore a real focus needs to be given to the housing shortages the UK faces,’ he said.

With demand from buy-to-let investors slowing, Jonathan Hopper, managing director of buying agents Garrington Property Finders, believes that the market is set to return to more normal levels of price growth.

‘However this gently cooling market may provide an opportunity for buyers, as some sellers are being forced to reassess their overly ambitious asking prices. On the frontline we’re now seeing many mid-range properties in the most desirable locations selling for below asking price, hinting that the power dynamic is shifting from a seller’s to a buyer’s market,’ he said.

‘In particular, investment properties of the sort favoured by buy-to-let buyers are increasingly being discounted as developers seek to offset the extra stamp duty. With the EU referendum still too close to call, the prospect of a Brexit will make its presence felt more in May and June as some investors hold off their purchases until the uncertainty is over,’ he added.

Source: Property Wire

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UK landlords looking for cheaper properties due to stamp duty surcharge

Landlords in the UK are looking for cheaper properties in response to the new 3% stamp duty charge on additional homes, according to the latest lettings index to be published.

The average price paid by investors in April fell by 8.3% month on month, from £194,000 to 178,000 and London saw the biggest change in behaviour with landlords buying homes costing 16.4% less than the previous month.

At the same time, the number of homes sold to first-time buyers increased by 19% between April 2015 and April 2015, while the number of homes bought by landlords halved, the data from the Countrywide Lettings index shows.

The index also reveals that average UK rental growth continued to slow. The rise of 2% in April was less than half the 4.7% recorded in April 2015.

London saw the biggest fall in average price paid, down from £436,000 in March to £365,000 in April. While overall house prices in London rose 13.9% over the last year, the capital’s landlords paid an average of 8.2% less than they did in April 2015.

However, generally lower priced markets saw a less marked response from landlords with average prices paid by investors rising month on month in the North East and Yorkshire.

April also saw fewer landlords purchasing homes, after a spike in activity in the first three months of the year. Landlords rushed to complete on their purchases before April 1st, in order to avoid a bigger stamp duty bill with 61% more landlords buying in the first quarter of 2016 compared to the first quarter of 2015.

The report points out that many sales which would otherwise have normally completed in April were pulled forward into March. Around half the number of landlords bought in April 2016 compared to April 2015. The number of sales to first time buyers rose by 19% over the same period.

Average rents increased 2% over the last year, leaving the average monthly UK rent at £932. Rental growth is now half the rate it was in 2015 and the report suggests that affordability constraints and the increase in the number of homes coming onto the rental market continues to slow rental growth.

‘April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill,’ said Johnny Morris, research director at Countrywide.

‘There’s early signs that first time buyer numbers are increasing in as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend,’ he added.

Source: Property Wire

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