Current market revealed: First time buyers are driving the housing markets

Just in August alone there were 35,000 first-time buyer mortgage applications completed, which is one of the best months this year, and 2% higher than the previous year. Experts said people that are taking their first step on the property ladder are benefiting from continued low interest rates, a good choice of mortgages and government policies aimed at giving the sector a helping hand. Furthering this stamp duty was cut for first-time buyers in 2017, leaving buyers with more money for better homes.

Buy-to-let mortgages have helped to transform the concept of housing in the UK over the last few decades. They represent one method by which rental housing can be transformed into an investable asset. Data from Savills 2018 shows the average rate for five-year buy-to-let mortgage could be an appealing prospect for many landlords, especially at such attractive rates and range of mortgage products available and will continue to grow, more than doubling over the past year. Property website Rightmove said that first-time buyers are in the best time to negotiate deals this autumn. Rightmove has also seen a softening in asking prices for properties with two bedrooms or fewer – the usual target market for both affordability-stretched first-time buyers and buy-to-let investors.

Overall the house purchase completions remain stable, driven largely by the number of first-time buyers which reached its highest monthly level since June 2017. First -time buyers generally are benefiting from low interest rates and more choice in the mortgage market, as well as schemes such as Help to Buy. Lenders continue to offer competitively-priced high loan-to-value products to attract first-time buyers and with property prices softening in some areas, there are good opportunities for those trying to get on the ladder for the first time.

It has never been a better time to buy, grab your opportunity now. At Fortitudo we strive in making it possible for first time buyers to get themselves onto the property ladder. Many of our developments are associated with Help to Buy, to kick start your journey to owning your own home. For more information on our latest developments, please visit out website.

5 things you need to know about the Help to Buy equity loan

  1. First time buyers

The scheme begun helping first time buyers back in April 2013, and since there has been over 169,102 competitions to March 2018, of which 81 per cent of these were first time buyers  and around 13,000 of these were based at London properties. The value of these properties is estimated at £42.23 billion, according to the Ministry of Housing, communities and Local authority.

  1. Equity Loan

The Help to Buy equity loan scheme supports those with a low deposit looking to get onto the property ladder. This is completed by combining a 5% deposit from the buyer, a government loan of up to 20% of the property value, which is interest free for the first five years, and a 75% mortgage. There is also a scheme for those looking to buy in London.

  1. Re-mortgaging

It is possible to re-mortgage with an equity loan in place, but it depends on the circumstance of the homeowner. There are a number of moving variables that will affect how easy it is to re-mortgage. This includes the mortgage loan itself, how much the property value has risen or fallen, whether the homeowner has any equity to put in and how much income they receive.

  1. Selling up

This follows the same process as any other property sale, however, at the point of sale, the homeowner will have to repay the equity loan in full to the Home and Communities Agency. The amount of paid back will be the same as the amount burrowed, unless you sold after the 5 year mark, then interest would start to occur onto off your equity loan.

  1. Alternatives

The Help to Buy equity loan is not for everyone, and there are many different ways for first time buyers to get on the housing ladder, such as the shared ownership scheme. This allows people to buy a share of between 25% and 75% of a property. A mortgage will be paid on the share the homeowner owes, with a subsisted rent on the remainder being paid to the relevant housing association.  Whilst shared ownership makes mortgages more accessible for those on a lower wage, homeowners still have to pay 100 per cent of the ground rent and service change on a property. Homeowners do have the option to buy a greater share of the property in the future, this is a process called stair-casing. However a stamp duty charge will be charged on the whole value of the property and will have to be paid once the shares equal or exceeds 80%.

Autumn Budget 2018: New Help to Buy scheme to be launched for first time buyers

On Monday it was announced from the government that a new Help to Buy equity loan scheme for first-time buyers will be launched in April 2021. The scheme will feature regional price caps, and come alongside reforms to stamp duty for shared ownership users, capital gains tax changes for landlords and extra funding for house builders. It has enabled developers the visibility needed to plan their land purchase requirements, and while the government has stated that there will be no extension after 2023, these schemes have already been extended twice.

New Help to Buy scheme for first-time buyers

The current help to buy equity loan scheme is due to end in March 2021, a new version will be launched with regional price caps. The scheme, which will run for two years until March 2023, will only be available to first-time buyers.

The new scheme will have a higher price cap, which will be 1.5 times the current average first-time buyer price in each region. With South West capping at £349,000 and London at the maximum of £600,000. The government says it has no plans to continue offering Help to Buy equity loans after March 2023.

£500m for housing infrastructure fund

Given that the major house builders cannot make up the shortfall in housing the British Business Bank will provide guarantees on up to £1bn of loans to small and medium sized builders, with an additional £653m going towards strategic partnerships with nine housing associations. The budget announcements also included a further £500m for the housing infrastructure fund, to unlock up to 650,000 new homes. The government has also agreed to reduce planning restrictions in order to make it easier to convert shops into homes.

First-time buyer stamp duty cut extended to shared ownership

The government will also extend stamp duty relief to first-time buyers purchasing shared ownership homes priced up to £500,000 backdated to include those who have bought since 22nd November 2017.

Currently, buyers who use a shared ownership scheme can either pay duty on their share of the property (if it costs more than £125,000 threshold) or on the whole value of the property (including the portion they haven’t bought yet but may buy further down the line.

Under the current system, those who chose the former would previously have missed out on the first-time buyer stamp duty relief. So, assuming you’re buying 50% of a home priced at £350,000 and only plan to pay stamp duty on your initial share.

– You share costs 175,000, meaning you’d need to pay stamp duty on the amount over £125,000 threshold, that’s £50,000.

– On this £50,000, you’ll have needed to pay stamp duty at 2% that’s £1,000.

Under the new system, the buyer wouldn’t need to pay this £1,000 charge. The cut to stamp duty for first-time buyers was originally announced in last years budget, and the chancellor says it has so far helped 121,500 buyers.

Non-resident stamp duty collection

The government will publish a consultation in January 2019 on introducing a 1% stamp duty surcharge for non-resident buying a home in England and Northern Island. Whilst stamp duty relief has also been extended, backdated to November 2017, on first-time buyers purchasing shared ownership homes, with an upper limit of £500,000.

Capital gains tax changes for landlords

The Chancellor says that the government will improve private residence relief on capital gain tax. From April 2020, letting relief will be reformed so that it will only apply when the owner of the property I in shared occupancy with the tenant. The landlord capital gains tax exemption on the final 18 months before a property is sold will also be cut to nine months. These changes will be subject to a consolation

What options are there to get yourself on the property ladder?

Currently, first-time buyers are driving the housing market, borrowers took out £300 million more in mortgages than last year, according to banks and building societies. Cheaper loans and government schemes with lower interest are encouraging buyers to save and get themselves onto the property ladder. From special tax-free savings accounts to shared ownership and innovative mortgages, there are options available to help buy your first home. Take a look at these top 5 options that have already helped millions…

Help to buy Lifetime ISA

If you’re saving towards your dream home, a lifetime ISA is a good choice, as you can get a boost of up to £1,000 free cash a year. You can save more into a LISA each year, £4000 more than you can into a Help to Buy ISA. You can also use the Lifetime ISA to purchase a high-value home at up to £450,000. To qualify buyers must be aged under 40, but over 18 to qualify.

What can you get out of a Lifetime ISA?

– You can transfer between providers.
– You get a free cash top-up.
– You can choose between cash savings and stocks and shares.
– You can deposit £4,000 a year, rather than face a monthly limit.
– It’s a tax-free wrapper
– You can purchase a property worth up to £450,000 anywhere in the UK
– If you and your partner both first-time buyers purchasing a property together, you can both open one and save – effectively doubting the bonus.

1. Help to buy ISA

These accounts help you save for a deposit and you benefit from the Government topping up your savings by 25%. You can put away an initial sum of £1,200. And can then save £200 per month after that, the government will give you a maximum bonus of £3000 once £12,000 has been saved.
Help-to-Buy ISA’s are also available for each first-time buyer, and not each household, this means if you and your partner were saving for your first home, you could each open a Help to Buy account and take advantage of the government schemes bonus. But Help to Buy ISA can only be used towards the total cost of the property, and not any additional fees such as solicitors and estate agent fees, or stamp duty etc.
What can you get out of a Help-to-Buy ISA?
– You get free cash to top up your savings
– Available from a number of banks and building societies
– These savings plans are tax-free
– You can transfer your ISA from one provider to another to chase the best rates
– This scheme isn’t limited to new-build homes

2. Shared ownership scheme

This scheme allows you to purchase a share of a new or existing home from a council or housing association, normally between 25% and 75% of the properties value. After living at the property for a certain period of time, you have the option to buy a bigger share of the property.

How can shared ownership scheme help you?
– You are only buying a share of a property, therefore a smaller deposit is required.
– Should make buying a home much more affordable.

3. Post Office Family Link Mortgage

If you are an aspiring first-time homeowner who can afford to repay a mortgage but you’re struggling to save enough for a deposit then the post office family mortgage could be the correct route for you. It allows you to secure a mortgage without a deposit by taking advantage of the help of your family. For the first five years, you will make two separate repayments, one towards the assistors mortgage (which is interest-free), and one towards your own mortgage, where interest rates will apply. With these arrangements you can use the equity in your parents’ home to help you get a deposit together, this means you don’t have to use your savings, and you won’t be draining your families hard earned savings.

What should you think about before applying?

When applying for a mortgage a lender will check your credit history and assess how much of a risk you are. These checks have become increasingly harder on buyers, due to the financial crisis back in April 2014. Furthering this the Bank of England also bought in restrictions, limiting the amount you can borrow. This will depend on your income, where banks will give you no more than 4.5 of your annual earnings. Buying a property is one of the biggest financial commitments a person can make and can be a daunting process for first-time buyers, so it is wise to seek professional advice, who specialises with in-depth knowledge of the market and who can look at a range of mortgage products to help you find your best deal.

New homes developers say higher interest rates and Brexit isn’t a threat for first-time buyers

This year has left much uncertainty in the housing market, with not only the interest rates being pushed up by the Bank of England but also the countries uncertainty around the Brexit ‘no deal’. In turn, this has led to mortgages rates sky high and UK wage development low, this is thought to of made it increasingly difficult for aspiring homeowners.

The increase in borrowing will have an immediate impact on households and is expected to dampen economic activity over the coming months. However, with scarcity at risk, there has been a high growth of first-time buyers, cashing in on the governments Help-to-Buy governments scheme. Estate agents across the UK, have not only seen a significant increase in new build homes being sold, compared to last year. But also housing asking prices across the market have also fallen by 2.3 pc this month according to Rightmove.

Mortgage approval rates for July showed another month of growth, which shows first-time buyers are still finding their way onto the property ladder. On the other hand, re-mortgage approvals fell by 7.3% July, showing that it’s becoming difficult to upgrade your home, rather than buy your first home.

Richard Carr chief executive of Fortitudo says this is a positive direction for the housing market for first-time buyers and Fortitudo will continue to help the housing market to grow, with our new build developments continuing to be associated with the Help-to-Buy Government schemes.

Top tips for getting on the property ladder in 2018

Planning to buy a first home can be as daunting as it is exciting for first-time buyers but there are a number of simple steps people can take to be 100% prepared and make the process run as smoothly as possible. With 2018 came the abolishment of stamp duty for first-time buyers, which has likely motivated aspiring homeowners to begin exploring how they can make their dream of owning their own home a reality. Check out these top tips to go from dream home to a real home this year.

1. Save save SAVE…
Saving for a deposit is undoubtedly one of the scariest and biggest hurdles anyone will have to overcome.

2. Research affordability hotspots
The property market around the UK is constantly changing, when buying a property, it is important to understand everything there is to know about the area you are hoping to settle. Try researching 3 potential areas to see which has the most stable market.
3. Get the most suitable mortgage to your circumstances
Take some time to really investigate the variety of mortgages that are available for first-time buyers. Some mortgage providers such as Virgin Money, have been developing innovative mortgages to help address challenges that first-time buyers in the current market.

4. Understand the credit score
Before getting a mortgage, you will be credit checked so now is the time to check your credit report and ensure all information is up to date and is accurate LINK TO CLEARSCORE. A slightly bad credit score can lead to mortgage lenders turning you away. It is the deciding factor in not only getting approved but also the rate of the mortgage you are offered. Now is the time to start paying any outstanding debt, be sure not to miss any payment agreements and all phone bills, utilities, and generic direct debits must be paid on time. Try to make more then the minimum repayment in 6 months prior to your mortgage application.

5. Do your calculations
Once your savings pot is up and running, consider using an affordability calculator to get an idea of how much you’ll be able to borrow based on your income and outgoings. This will give you a clear guide as to what you can really afford. Once on the property ladder it can only get easier…

6. Know what your spending
One of the first steps to feeling more in control of your finances is to monitor your spending – plan in advance and review all spending. There are many saving cards, which do this for you, the saving card of the year is Monzo; an application platform that tracks your every move.

Richard Carr tells his 7 top tips for buying investment property

Buying an investment property continues to one of the smartest areas to invest your money. An investment property should be about increasing your wealth and securing your financial future. However, you need to keep in mind how effectively you are with managing your investment, which will determine whether or not the investment helps you reach your financial goals. The cost of owning an investment property can be surprisingly low after you take into account your rental income and tax deductions you’ll be entitled too. Check out Fortitudo’s tips for helping you bag a feasible investment…

1. Choosing the right property at the right price

Investing in property is usually about capital gain, so choosing the right property is vital. It is about choosing the property that is most likely going to increase in value and is appealing to rent out. The key is to do your research, work out what everything is selling for in and around the area and then you’ll discover that you will be very good at working out what the property might be worth.

Lenders and mortgage insurers have valuable data on different locations and property developments. This information can easily be accessed to assist you to avoid picking the wrong investment property. Ensuring you have a steady rental income stream is also vital because this cash flow will see you through the holding of the asset, providing an income and become a safety net of cash if anything needs maintaining within the property.

There are many different types of property you can buy, which all have their pros and cons, These are worth overlooking potential investments. It’s important to note that your property needs to suits the demographics of the chosen area you intend to invest in.

• Some apartment units have a very low maintenance cost, but can be slightly higher than the generic home.
• Houses are more expensive to maintain but can be offered to students and families, depending on the client you wish to cater to.
• Land can provide no rental income but may appreciate more quickly if purchased in an area with limited supply.

2. Do your sums – Cash flow is always king

Investing in a property should be considered a medium to long-term investment, so you need to make sure you can afford to maintain your mortgage repayments over the long term. Once you own your investment property it can become quite inexpensive to keep, this is down to the tax reduction on many of the expenses and the rent that is earned. It is also important to note that rents tend to increase over time, leading to higher income. Don’t forget to take taxes into consideration when doing your calculations. These can change all the time, Stamp Duty, Capital Gains Tax, and Land Tax all need to be taken into consideration.

3. Finding a good property manager and let them take control

A property manager is usually a licensed estate agent and a professional in their field. They can give you ongoing advice, manage your tenants, maintain any issues, review rents, find you the right tenant from checking and referencing. Some estate agents offer this at a small percentage of a deduction of your rental price.

4. Understand the market and its dynamics

If you’re investing your hard earned cash into something, you need to know everything about it. Treat the list below as a starting point of considerations before investing.

• Do your research on other properties in the area.
• Speak to as many locals as possible.
• Visit local estate agents.
• Always consult professionals to do things you’re not sure on.
• Research independent information for online; average rents, property values, demographics and suburb reports.

5. Make the property attractive for renters

Always keep to neutral tones and keep the kitchen and bathroom both modern and in good condition. This will always attract better quality tenants, and also gives them the opportunity to make it their own. Remember this is not your home, it is simply an investment, therefore do not risk getting too involved into what it looks like.

6. Use the equity of another property

Leveraging equity from your personal loan or another property investment can be a great way to purchase your investment. It also displays to mortgage lenders that you are a good candidate to lend too, considering previous payments haven’t been missed.

7. Always look at the long-term goal

Remember to always look at the bigger picture, property prices do not always rise straight, having patience is vital in any investment. The longer you can afford to commit to a property, the better the investment will be for you.

At Fortitudo we have many different new builds that are available to buy off-plan, which will be a good investment for first-time buyers or buy to let investors. For more information please visit our website.

Richard Carr talks about 3 things you need to know about the UK housing market in 2018

Since the Brexit referendum has happened, the UK housing market has been experiencing some instability in certain areas. It has been facing major difficulties in the recent months in properties at the higher end of the spectrum and in certain geological areas. This, in turn, has resulted in uncertainty from buyers. Since 2016 the average price in the UK has gone up to over £220,000 per dwelling. Although this pricing has gone up between 2012 and 2017, the earnings growth hasn’t corresponded to this, making it extremely difficult for people to buy houses. Richard talks to us about 3 important aspects of the housing market that you could take advantage off.

A fixed rate mortgage might be the best option for you

• You remain stable for consecutive years.
• Can be used with buy-to-let properties too.
• More properties are being built and are expected to come to the market this year.
• First-time buyers can take advantage of schemes like Help to Buy to further augment choices.

Buy-to-let is still a viable option for investors

• Tax reforms left uncertainty for buy-to-let investors.
• Liverpool has increased in rents at 6.2% PA.
• Nottingham increased in rents at 6.2% PA.
• Cardiff increased in rents at 6% PA.
• Southampton increased in rents at 5.9% PA.
• Greater Manchester increased in rents at 5.9% PA.
• University towns remain a good place to invest in buy-to-let.

Affordable homes are available
• Local councils are working with private developers to make housing assessible for all.
• Shared ownership allows you to part-own or rent part of a home.
• Government schemes including Help to Buy.
• Areas such as the west of the UK are cheaper to live.
• Stamp duty has been abolished for first-time buyers if the property they are buying is less than £300,00.

 

 

 

Richard Carr talks about Fortitudo’s investment into Poole

For the first time in 12 months, it looks as though House prices are on the rise down south, especially in Poole, rising by 8.3% in the last 12 months. According to the National Statistics, the average property in the area sold for £317,561, which is nearly 50% higher than the UK average of £226,906. This is, however, making it increasingly difficult for first-time buyers to get themselves onto the property ladder.

Throughout the whole of the UK, there is an increase in house prices. However, the strongest growth regionally has shifted from London to the south west of England. Christchurch houses have risen by 5.9% in the last 12 months and April saw a 3.1% leap, selling their average property for £350,696. Whereas Bournemouth houses have risen by 3.6% since June last year and 0.2% in April. Although these properties will increase in value for current owners, it makes it even harder for first-time buyers to even think about saving for a deposit, not to mention all the other fees and extra’s that come with owning a home.

At Fortitudo we try to make property assessable for everyone and create property ownership possible for first-time buyers. There are a number of developments currently under construction in Poole and Bournemouth which will all be associated with Help-to-Buy. The government scheme allows first-time buyers to purchase a new home with just a 5% deposit, the scheme also recommends mortgages that would work with them to get everything done efficiently and less costly as possible. Most of our sites are associated with Help-to-Buy, you can find which development is most suitable to you below!

Help to Buy – Key points

– The fifth anniversary of the Help to Buy loan scheme is this year.
– You can borrow interest-free for five years.
– You can get on the housing ladder sooner.
– You could buy with a smaller deposit but get better mortgages rates.
– Your mortgage payments are likely to be less than your rent.

Fortitudo Developments that intend or currently feature Help-to-Buy

The Highlands, Fareham
Willow Park, Havant
Black and White Cars, Commercial Road
West Quay Road, Poole
Wootton Mount, Bournemouth
30 Tower Road, Branksome Park
– Canaway Court, Poole
– Poole Pottery, Poole

 

 

Richard Carr talks to us about the current property market in London

Some years ago, London property investment was perceived as very stable. For example, back in 1998, the average price of the property was £115,00. 20 years later in 2018, that residential price would be somewhere around 300% higher. But just because something is dependable, it doesn’t make it resistant to change.

In 2017 experts started warning about a UK housing market downturn in London within the coming year, which was demonstrated in the last half of the year and has continued during 2018. This is led to a lowered buyer demand and house prices flattened. Mortgage lender Halifax said that London housing prices are dropping at their quickest rate in nine years. Prices have dropped 3.2 %, which is actually the biggest decline since the financial crisis. But from property investors perspective Richard Carr explains that this is a good time to buy. So the question is, what has caused these changes?

UK leaving the EU
• Inflation rose to around 2.5 %.
• Brexit impacted the housing market the most
• Affordable housing has plummeted
• People are not selling
• Home-owners are buying abroad

Stamp Duty Land Tax
• Has become 2.3 % higher over the past 5 years.
• Is on a constant rise.
• London is a prime area for high stamp duty.
• Has made buy-to-let housing investment less attractive.

So, is it a good time to invest in property?
The key to succeeding in the housing market is staying ahead of the market as much as possible, it’s about knowing when and where to buy and to sell. There are some signs that point towards what could happen in 2019, but to go beyond, it takes a real expect to understand all the factors affecting the housing market right now. No matter your situation, whether it’s buying your first home, or buy-to-let, or even considering buy-to-leave properties, all these routes need experts to advise. See what Fortitudo has to offer today for your current situation, to identify the right opportunities for you. It is my opinion that when we exit the EU there will be a boom in property and the UK, this is because many large corporations have held back on their capital expenditure, we will become the Hong Kong of Europe which will lead to a flood of inward investment.