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Home Ownership Down As PRS Numbers Continue To Rise

Home Ownership Down As PRS Numbers Continue To Rise

Census Reveals Change In UK Property Ownership

The level of home ownership in England & Wales has dropped, as the number of PRS properties increase, according to data obtained from the 2011 census results.

Results of the 2011 census, published on Wednesday 5th December 2012 have underlined the falling levels of property ownership in the UK.

Many more people are choosing to live in private rented sector (PRS) properties rather than have the responsibilities and financial headaches of property owners, according to the data supplied by the Office for National Statistics (ONS).

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Landlord Mortgages Are Hard To Get say RLA

Landlord Mortgages Are Hard To Get say RLA

According to a recent survey by the Residential Landlords Association (RLA), almost half of their landlord members have encountered difficulty when trying to obtain a buy-to-let or landlord mortgage.

141 RLA members were asked how easy they had found it to access a buy-to-let mortgage,

  • 21% said they were unable to obtain a buy-to-let mortgage
  • 24% said they found it very difficult
  • 22% had to shop around
  • 14% found it easy to get a mortgage
  • 17% said they found it fairly straightforward

The RLA said that the first major challenge for the new housing minister Mark Prisk will be to persuade banks to unlock the financial support needed by private landlords to grow the residential lettings sector at a time when more homes are needed.

RLA chairman Alan Ward said: “We welcome the Government’s renewed commitment and interest in the opportunities that the private rented sector can play in meeting the country’s housing needs. However, this will not happen without financing from the banks. It is time that the blame game for the difficulties in accessing finance between Government and the banks came to the end for the sake of those desperate for a roof over their heads.”

The release of the RLA data coincides with news that the UK mortgage market has endured its third worst August for almost two decades.

The news comes from e.surv, which are part of the LSL property group, who have made the gloomy forecast based on its own activity and reckons to be correct to within a near margin of official statistics which will be issued later in the month.

The firm is predicting that house purchase loans in August fell 8% from August 2011, down from 53,040 approvals to 48,913 – making last month the third worst August for almost 20 years.

Whilst last month’s figure was up from July’s 47,312, e-surv said this shouldn’t be taken as a sign of improving market conditions, saying that July was weak by historic standards with purchase approvals 5% lower than July 2011.

The firm said tightening credit conditions and the effects of the double-dip recession were moving the UK mortgage market back towards 2010 levels and the annual contraction in landlord mortgages is the result of a sharp fall in lending to borrowers with deposits of less than 15%.

The average LTV on a property purchase loan has now fallen below 60% for the last three months, reversing a seven-month period where it was at least 60%.
 
Richard Sexton, business development director of e.surv, said: “Much of the progress the mortgage market has made since summer 2011 has been unravelled by the double-dip recession. Lending volumes – particularly to first-time buyers – are slipping back towards the dismal levels we last saw in 2010 and early 2011. This is largely thanks to a fall in the number of high loan-to-value mortgages banks are willing to grant.  Credit conditions for banks have become painfully tight, and they’ve responded by toughening criteria on mortgages aimed at borrowers with small deposits. The distraction of the Olympics, the awful weather and holiday season could also all be reasonably cited as potential contributory factors.”
 
e.surv said August was the third consecutive month where lending has fallen on an annual basis, and the biggest year-on-year fall for 15 months since 1993, when the Bank of England’s records begin, only 2008 and 2010 have seen lower lending levels during August.

e.surv’s analysis found that more landlords have stepped in to fill the vacuum left by first-time buyers at the bottom of the market. Despite overall purchase approvals falling 8% year-on-year, approvals on property worth less than £125,000 fell by only 4% as landlord mortgages were used to purchase property that was out of reach of first-time buyers.
 
Sexton said: “With rents pushed up to record levels, landlords are piling in to cheap property. Tight mortgage lending conditions are a virtuous circle for landlords and a vicious one for first-time buyers. The fewer first-time buyers there are, the cheaper property becomes for landlords, and the more expensive rents get. We expect landlords to continue to represent a disproportionate share of the buying market in the medium term. Would-be buyers will hope the Government’s Funding for Lending scheme can help improve the flow of credit in the near future.”
 
There was some positive news in August. On a month-on-month basis, house purchase loans rose 3% from 47,312 in July.

But this shouldn’t be taken as sign that market conditions are set to improve. July was weak by historic standards – purchase approvals were 5% lower than July 2011 – and high LTV lending levels were the same as in August.

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Despite the economic downturn still affecting the country’s economy during 2011, private rental sector landlords witnessed increasing rental yields in all parts of the UK.

Monthly Buy To Let property rents increased by 4.8% in 2011, giving property investors a rental yield of 6.1%.

The average monthly private rented sector (PRS) residential property rent climbed up from £682 in 2010 to £716 in 2011.

Figures from BM Solutions (part of Lloyds Banking Group), show that in East Anglia residential property rents increased by 8%.

In the North of England rents were up by 6.9% but property rents in Greater London saw slower growth and only increased by 5.6%, although the average residential property rent in London ended the year 69% higher than the national average at £1,212 per calendar month.

The areas with the lowest average PRS residential property rents in the UK during 2011 were:

  • Wales – £474
  • The North – £488
  • Yorkshire & Humber – £488

 

UK Buy-To-Let Mortgage numbers up 84,000 on 2010 figures

UK Buy-To-Let Booming Again!

2011 saw the number of UK residential properties bought using Buy To Let mortgages rise by 84,000 on 2010 figures.

Council of Mortgage Lenders (CML) figures show that landlords advanced a total of 34,800 buy to mortgages in the last three months of 2011 alone, with a total value of more than £4 Billion (GBP).

Therefore buy to let mortgage lending now accounts for almost 13% of the total outstanding value of all residential mortgages in the UK.

CML Director General, Paul Smee said “Buy-to-let lending continues to perform well. Demand for rented property remains high, so the rationale for buy-to-let remains strong and there is little reason to foresee any change to this positive outlook for the UK private rental sector.”

With improvements in the general availability of Buy-To-Let mortgage products, better tenant referencing and the introduction of specialist insurance policies such as Rent Guarantee Insurance, landlords are likely to have a few less financial worries, so, the PRS Buy To Let mortgage figures are very likely to rise again this year.

There are currently more buy to let mortgage products available than at any time since the onset of the financial downturn in 2007 and specialist mortgage lenders recently referred to 2012 as being ‘a boom time for landlords’.

UK Private Rented Sector Survey by MyPropertyPowerTeam.co.uk

UK Buy To Let Landlords Want More Properties But Are Unable To Get Mortgage Finance

A new survey of Landlords in the Private Rented Sector (PRS) has discovered that only 20.2% ( 1 in 5 landlords) in the UK, were able to add fresh residential properties to their existing residential portfolio stock during 2011.

Property value growth expectations and the prospect of a regular income were the key drivers behind the property investment trend and only the lack of available mortgage finance, and/or financial know how, held back even more landlords from adding to their property portfolios.

Out of all the landlord insurance customers interviewed, 85% predicted that residential property values in the UK would remain the same for at least the next 12 months and private sector residential rents were expected to be considerably higher in 2013.

London led the way, after 87% of respondents said they believed that rents in the UK capital would continue to rise throughout 2012.

The data is from the PRS Landlord Survey carried out among subscribers by MyPropertyPowerTeam.co.uk during the last quarter (Q4) of 2011.

The data also showed that 59% of landlords have been investing for more than 5 years would hold onto their property until around the year 2025, however, the average holding period for UK PRS properties was around 15 years.

The appetite from property investors in the UK PRS for additional property assets is still extremely strong and the UK rental market is seeing demand outstrip supply as private tenants seek quality PRS accommodation. The current rental trend shows little sign of abating at present, despite all the UK Governments welfare reforms.

The UK Private Rented Sector is currently buoyed up by a growing population that is spending longer periods than ever living in rented homes, similar to the continental norm.

Landlords are making use of insurance products to protect their property assets and even Rent Guarantee insurance to ensure regular monthly rental income.

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Property Valuations In UK on the Increase

UK Residential Property Values Increase Across the UK

According to Nationwide 9 out of 13 regions in the UK recorded residential property price rises in 2011, with London the best-performing region (+5.4%) and Northern Ireland the worst-performing region (-8.9%).

Property prices in Scotland are down 0.8% on the year, having remained steady in the final quarter of 2011, in Wales prices ended 2011 up 1.5% despite having lost 0.9% in the final three months.

For the UK as a whole, the typical value of home stood at £164,785 in December, following a 0.3% increase during Q4 which helped produce an annual price rise of 1.1%.

However, at 5.2, the average house price to earnings ratio remains above the long-term average of around four, although down from a peak of 6.4 in 2007.

Due to continued property price falls, Northern Ireland is now the cheapest UK region in terms of average prices, and also the most affordable relative to average earnings.

The North remains the most affordable English region, while annual price growth of 5.4% has consolidated London’s position as the least affordable region, with a house price to earnings ratio of 7.4.

In 2012 the market is likely to be dominated by fears over rising unemployment, the squeeze on household incomes and the Eurozone finance crisis.

Forecasts for 2012 are for property values to remain stagnant at best.

Shortage of suitable property supply should continue to underpin the market, although Halifax recently reported that there were only 187,000 First-Time Buyers (FTB’s) in 2011 – the lowest annual total since the lenders’ records began in 1974.

New data released by the UK’s Council of Mortgage Lenders (CML) shows that Monthly mortgage payments on residential properties in October 2011 were the most affordable for nearly eight years, but due to increased regulation, lending numbers dropped.

Although First-Time Buyers’ (FTB) deposit requirements have remained stable in recent months at an average of 20%, their monthly interest payments have continued to fall and now typically consume 12.3% of income, the lowest level since January 2004.

Affordability for movers also improved, with this group paying an average of 9.2% of income on mortgage interest, the lowest level since monthly records began in 2002. However, despite the improved affordability of monthly mortgage payments, lending activity has slowed.

In October 2011, 44,500 loans for house purchase were advanced, down from 48,200 in September and from 46,900 in October 2010.

Of the 44,500 loans, 16,400 went to first-time buyers, down from 18,200 in September 2011, down 1% on October last year.

Mortgage affordability is one thing, but the lack of deposits remains a major factor in holding back the housing market, especially for first-time buyers.

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Will Britain’s decision to stay out of the EU pact mean to the struggling UK property market?

The UK property market has been kept afloat by property investors seeking to put their money in a safe place as the Euro crisis worsened.

Last month, the number of properties ‘under offer’ rose by 21% compared to November last year. As a result, the overall total value of properties under offer also rose, by 19%, compared to the previous November. The number of properties under offer in November also rose on the previous month, by 9%. Other Estate agents have also been seeing frenetic activity that goes well beyond a normal boom.

There is always the last-minute dash to conclude sales before Christmas, however agents have noticed an increased level of inquiries from overseas buyers who are coming to the UK and London in particular, over the Christmas period to source properties.

The international interest in London property continues to boom and is anticipated to continue to grow in 2012. However, history shows that the property market can turn on a sixpence – or in this case, a euro.

No one knows what to make of it, although if Europe turned to dust, the London housing market would simply carry on booming.

What happened in Brussels last Friday could impact on the London property market, or Mr Cameron’s comments could have a wider impact on the UK property market.

It is possible that international buyers won’t like our attitude and will focus their attentions elsewhere, but the UK property market is still the safest place to invest, especially with the current Buy To Let Boom and strong rental yields.

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UK Bailiffs Christmas Holidays

UK Bailiff Seasonal Amnesty

A seasonal reminder to landlords and letting agents that Bailiff Amnesty’s will begin around 12th December 2011 to the 9th January 2011. Please check your local County Court for more details.

 The amnesty, which is not widely publicised, is implemented due to local authority offices, solicitors, courts and housing welfare organisations festive holiday closures.

Unfortunately for landlords, the festive season of good cheer can be one of the costliest periods due to an increase in rent arrears, especially from LHA tenants.

 Up to the end of 2010, there were 995,000 LHA tenancies and rent arrears in this sector were thought to be in excess of £290 Million (GBP).

This year research indicates that there are now over 1Million LHA tenancies and with more changes to the Government’s Welfare Reform Bill due to be implemented on 1st January 2012, rent arrears are expected to increase further.

 Landlords are urged to act fast when dealing with defaulting tenants, especially at Christmas as courts experience backlogs of paperwork and hearings in the New Year.

Speak to your local office now or call our free phone help line – 0800 840 7133

 Legal 4 Landlords Eviction and Rent Recovery Services

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Despite the apparent slump in the UK property market, Nationwide Building Society’s gross mortgage lending figures have increased by 48% to £8.9 Billion (GBP) in the six months to September.

Despite the dwindling number of First-Time Buyers (FTB) in the UK property marketplace, Nationwide lent them more than £1.2 Billion (GBP) in the first half of this year, 3% more than last year.

Over the same period, Nationwide’s subsidiary The Mortgage Works (TMW) doubled its gross mortgage lending to £2.6 Billion (GBP).

Nationwide’s Chief Executive Graham Beale, said: “It is particularly pleasing to see a 48% increase in our gross mortgage lending, which demonstrates our commitment to supporting growth in the economy as well as meeting the needs of our borrowers”.

Nationwide also reported a 17% rise in underlying pre-tax profits to £172 Million (GBP) in the six months to the end of September 2011, compared with the same period in 2010.

Even though historically low Bank of England (BoE) interest rates are making life difficult for savers, the building society saw a 250% increase in the rate of cash deposited in its savings accounts to £1.4 Billion (GBP), making it the second largest savings provider in the UK.

Despite the positive results, Nationwide expects conditions to remain difficult until the current Eurozone crisis is resolved and the UK economy stabilises.

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