Since George Osborne announced his plans for the housing industry in the budget last month there has been speculation from many members of the property industry as well as the private rented accommodation sector as to how his plans will work. The ‘Help to Buy’ scheme has been widely criticised as many feel that helping members of the public buy a property is not enough, and that the government should allow buy to let landlords to take advantage of the new scheme in order to alleviate demand for private rented accommodation.
However today it has been revealed in a report by the Royal Institute of Chartered Surveyors (RICS) that the housing market may actually be on the rise, and that there has been an increase in interest from potential buyers looking for a home. RICs went on to admit that even though the figures are well below that of the housing ‘boom’ years, they are still on the rise and are now at a three year high. Discussing the property market, Peter Bolton King from the Institute said: “A buoyant, healthy property market is central to economic recovery, and while these are very much early signs, it is encouraging that sales are beginning to pick up.”
The figures showed that compared to February last year the number of house sales in the UK rose by ten per cent, and it has been suggested that this is down to first time buyers being determined to buy a property even though they need to save around twenty per cent for a deposit. However, buyers have been warned that saving for a deposit is only one thing, actually affording the repayments will also be extremely difficult for some as mortgage interests rates are at their highest levels since the past twenty five years.
For example, Sylvia Waycot from Moneyfacts warned: “It’s easy to get caught up in the excitement of heavily marketed mortgages that shout out about low interest rates, but beware that they will often be at the expense of high fees. The average fees charged have risen by almost 8% since January, though it is hard to justify how setting up costs can possibly have risen by this much.” It seems that even though the property market may be improving, buying a property is still risky, and so if you are planning on investing in a new house you should contact your landlord insurance provider for advice.
Yesterday George Osborne officially announced the Budget for the next year, and as expected he discussed the importance of investing in and creating new housing. In order to improve the housing market and help get more families on the property ladder or move into second homes, the government have launched two new schemes under the ‘Help to Buy’ plans. The first scheme will be targeting would-be buyers, as the government is promising to give those that save up a 5% deposit a 20% interest free loan towards buying a property. The second scheme is aimed at encouraging lenders to give mortgages to those with small deposits in order to boost the housing sector.
However, not everyone is convinced that the new Help to Buy schemes will work, and some have even stated that Mr Osborne has missed the point altogether when it comes to solving Britain’s housing crisis. For example, Jonathan Moore, managing director of Easyroommate.co.uk, said: “The Help to Buy scheme will go some way towards releasing some of would-be buyers from the rental sector but this policy in isolation isn’t enough to solve the housing problem. There is still a huge supply and demand imbalance in the rental market and this needs to be addressed. Boosting house-building in one part is the answer but the Chancellor has missed a golden opportunity to unlock accommodation sat idle across the country.”
Landlords with unoccupied property were not mentioned in the Budget announcement, however many local councils have already called for landlords to try and reduce void periods as much as possible and not rely on landlord insurance policies or unoccupied property insurance instead of finding tenants. Some members of the housing industry have been more positive about the Chancellor’s plans, yet still are concerned that it may not work out due to lack of enthusiasm, such as Donna Houguez, Market Analyst for Quick Move Now.
Ms Houguez said: “I think it is admirable that the Government is making this statement of support to the property market, and it clearly hopes that creating movement in this one sticky area will, in turn, stimulate the layers above. However, I am concerned that take up of past government schemes, from lenders, house builders and buyers alike, has been pitifully low and no rationale has been demonstrated to explain why ‘Help to Buy’ is likely to be any different.”
A leading landlord association is calling on the government to offer help to residential landlords just hours after the Coalition Government gave the green light to Social Landlords to up their rents.
The National Landlords Association (NLA) believes that as a result of the austerity measures announced in the Spending Review, the private rental sector is going to have to provide more housing over the next four years. Many experts believe that the new measures introduced to cover social housing may well create problems and the NLA has been quick to ask questions.
David Salusbury, chairman of the NLA, falls into this category, he says buy-to-let mortgages need to be more accessible to landlords wishing to add to their portfolio and buy landlord insurance. He envisages a shortfall of properties offered by social housing and that the private sector may well have to help out. He said “The government must now put in place a strategy to incentivise the growth of the private rented sector and support professional landlords in providing much-needed homes to rent.”
Many charities believe that the new government proposals whereby social landlords can now charge up to 80% of the market value may well have a negative effect on providing housing to people on low income’s but also feel the private sector can help in other ways.
Heads of many national charities supporting the homeless and low income families believe private landlords often charge too much rent and government regulation designed to root out rogue landlords is desperately needed. The Chief Executive of the Citizens Advice Bureau, Gillian Guy, described private sector rents as ‘expensive’.