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UK Housing Market may be Improving

Yesterday we reported how it is currently taking young people an average of ten years to save up for a deposit in order to buy their own property, and up to twenty four years for those that want to move into London. However, now there have been reports that the UK housing market may actually be improving, as the Council of Mortgage Lenders (CML) have said that the amount of first time buyers has actually increased in the last year.

At the same time, the Office for National Statistics has also reported that the housing market is improving, and that last year house prices increased by 3.3 per cent. Furthermore, the Royal Institution of Chartered Surveyors found that property sales have now increase for the fourth month in a row in January, meaning that all signs are pointing towards the worst of the housing market crisis to be coming to an end.

Discussing the statistics, Peter Bolton from the Royal Institution of Chartered Surveyors said: “It is interesting to see that the amount of completed transactions are on the rise, as confidence returns to the market place. While it is still very early days to talk about a comprehensive market recovery, activity levels are still encouraging and there is some optimism out there that things could continue to improve.”

“That said, in many parts of the UK – such as London and the South East – high house prices and the lofty deposits required by many lenders continue to prevent may first-time buyers from getting a foot on the ladder, which is preventing any significant movement at the lower end of the market.” Private rented sector landlords could use this new information to their advantage, especially if they are planning on investing in more properties to add to their portfolios.

It is important for landlords to consider how the housing market could affect their business, especially if there is soon less demand for private rented accommodation. It is important for landlords to invest in landlord insurance that includes an unoccupied property policy that can help with mortgage payments should any houses in their portfolio become unoccupied for a substantial period of time.

Housing Market could soon be on the Mend

We reported last week that there has been some good news when it comes to the housing market as it looks like in 2013 it may start to pick up again. The increase in demand for housing and the introduction of cheaper mortgages means that it may be possible for house prices to bounce back. And to make things even better, it has been announced today that housebuilding companies are actually beginning to invest in the market again, which will increase property values, create more jobs, and eventually boost the UK economy.

The housebuilding company Crest Nicholson has floated five hundred million pounds for new houses to be built, which is the first significant public offering in the industry for almost a decade, and it is expected that retirement builder McCarthy & Stone will also be looking to re-enter the market soon. This will come as good news to buy-to-let landlords, as an increase in new housing may mean that they can expand their portfolios and answer to increasing demand. However, landlords also need to be wary as the government is trying to help the public – especially young people – move away from renting properties and buying them instead.

If the private rent sector does take a hit from the introduction of new houses that are for buying purposes only, it is important that landlords invest in landlord insurance to help them if they find themselves with unoccupied properties. However, even though the government is introducing schemes such as NewBuy and FirstBuy which help members of the public move onto the property ladder, many people are saying that even with new houses being built the market may not change for a very long time.

Barrat Developments’ chief executive Mark Clare warned: “The risk is that we continue to see very low production volumes and increasing demand, which would lead to upward pricing pressure. At the moment the housebuilding industry is around 40 per cent down on where it was. It took a very substantial step down and there is a limit to how far we can grow. It could be 2020 before the industry is back to where it was. That is where the risk is.”

Estate Agents predict boost to Housing Market

Whilst a few weeks ago it was reported that the housing market may stagnate this year, today research published by the Royal Institution of Chartered Surveyors says that the housing market may actually be ‘over the very worst’. The report states that twenty four per cent more letting agents are now predicting that property sales will increase in the next three months not decrease which is what was predicted originally. Chief executive of the house builder Taylor Wimpey, Pete Redfurn said that “Two weeks into 2013, consumer settlement towards the housing market is more positive than we have seen in recent times.”

Positivity in the housing market has been attributed to mortgage rates being cut in the past few weeks, with some fixed rate two year deals now offering just 1.99 per cent. Furthermore, the government’s Funding for Lending Scheme has increased confidence in the housing market, as the Bank is allowing financial giants to borrow up to six hundred million pounds as long as they loan the money to home buyers and businesses in order to improve the market.

Buyers from overseas have also helped the market, especially as they are investing in properties worth millions of pounds in London. For example, the new apartments built on the old Battersea power station were bought within a matter of days. Rob Tincknell, chief executive of the Battersea Power Station Development Company said: “It’s been like the start of the Harrods sale. We had people queuing from 6:30am on Thursday and the London allocation sold out in days.”

Whilst many are confident that the housing market is set to continue to improve, it has been pointed out that increased demand for housing is mostly in London, whilst in other areas of the country the housing market is still suffering. Furthermore, economists at Capital Economics are remaining cautious about the situation, saying: “The Funding for Lending Scheme has helped to ease conditions in the mortgage market somewhat, leading to a marginal improvement in housing market activity. But we expect unemployment to start to rise and real earnings to fall yet again this year. With housing still overvalued on most metrics, that points to a year of gently declining prices.”

For landlords that are planning on buying new houses this year, it is important that they are covered by landlord insurance as if the housing market does fall through there may be a knock on effect on the rental market and the amount of demand there will be for new houses.

Rich/Poor Housing Divide Increasing in London

It has been reported today that London officially has the lowest percentage of homeowners in the whole of the UK, with almost a quarter of the entire population of London now renting properties instead. This is proving to become a problem in some areas of London, where the lack of affordable housing is starting to cause a rich poor divide that is threatening communities.

The Guardian has reported that Hackney in the North East of London has the lowest percentage of mortgage free homeowners in the whole of England and Wales. Furthermore, the recent popularity of Hackney has led to professionals moving to the area, creating higher demand for housing, and therefore raising rent prices substantially. Even one bedroom flats above shops described as ‘character properties’ are being rented out for over two-hundred pounds a week – or can be bought outright for just under two hundred thousand pounds. Grace Santos, whom has seen the recent change in Hackney has said that “before, you could find a house to buy here very easily, but now it is very expensive. Rich people are coming here now because they think it’s posh, but it’s not posh. I don’t know what young people can do, where they will live”.

Help may soon be at hand however with housing groups such as the Hyde Group trying to close the rich/poor divide in London by regenerating run down areas and creating new homes. For example, the Packington estate in Islington, North London has a large amount of new identical homes that can either be bought outright, or be rented by low-income local families for as little as £112 a week. The estate therefore aspires to embody the ideal of the socially mixed community by not out pricing those with low incomes.

The increase in the rich/poor divide will also affect the way that landlords rent their properties in London, especially as many young people are now opting to move out of the city in order to find rental prices that they can afford. Therefore, whilst some areas of London are becoming more popular, others are finding themselves with a large amount of unoccupied housing, which landlords will have to continue to find the money to pay the mortgages for unless they are covered by unoccupied property or landlords insurance.

Housing market will be helped by new affordable homes scheme

The Dumfries and Galloway area of Scotland looks set to benefit from a £13million scheme to build one-hundred new affordable properties across the region. Experts predict the scheme will free up the region’s pressured housing market, not to mention boosting the construction industry.

Councillors will be presented with a proposal on Friday 23rd September where they will be asked to commit to taking out a £9 million loan (70% of the cost). The new homes will be provided for the rental market to start with but eventually they will be sold in order for the money to be recouped. The scheme will be part of the Scottish Government’s National Housing Trust, whose aim it is to provide more affordable homes throughout Scotland. The homes will be targeted for mainly rural areas across the region of Dumfries and Galloway.

If given the green light, the scheme will aim to deliver new-build properties that will be available for rent for between five to ten years. The properties will be covered by landlord insurance up until the time comes to sell them. When the homes are sold, the money generated will be used to repay the council loans to the Public Work Loans Board. The council loan will be guaranteed by the Coalition and will stay in place if any change in Government is made and it will run for the proposed rental period of up to 10 years. The proposal would see both houses and flats with between two and four bedrooms built, mainly in small villages.

Development manager Mr O’Neill said: “The report also recommends that properties made available through the National Housing Trust scheme are primarily targeted at households on low to moderate incomes who are currently on Registered Social Landlord waiting lists and currently not in a priority group for accessing social housing. Sitting tenants will be given the first opportunity to purchase their property when the developer opts to instigate the sale. Should the tenant not opt to buy, it is proposed that local Registered Social Landlords are given the next option to purchase.”