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.
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.
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
It’s recently come to light that MPs are demanding an explanation from government ministers about a huge amount of money from the housing budget that hasn’t been spent.
They were informed that £817 million that was allocated for the UK’s desperately needed affordable housing schemes and other projects has ended up back at the Treasury.
News of this unspent cash has apparently astonished members of the cross-party housing, communities and local committee. It certainly seems to directly contradict the prime minister’s recent assertion that housebuilding is at the top of the Conservative’s priority list. In addition, it must have been shocking to hear for local authorities, many of which are becoming desperately mired in financial problems due to constant cost cutting measures from central government.
The committee discovered the colossal underspend for the financial year 2017-2018 and confronted both the homelessness minister (Heather Wheeler) and housing minister Dominic Raab. The government is under massive pressure from MPs and the Local Government Association (which is also controlled by conservatives) to implement some helpful measures for the local authority sector, which has endured budget cuts of 50% since 2010.
Strain on local authority budgets
Bob Blackman, Tory MP and acting chair of the committee, said: “We will be wanting to know why this very large sum has not been spent at a time of great strain on local authority budgets, and why it was not channelled to other spending projects.
“It does not help those of us who argue that more should be given to local authorities if the chancellor knows money he gave last time has not even been spent.”
MPs want to argue for more money for local authorities, given that unexpectedly high tax receipts have left the Treasury with between £7bn and £10bn extra.
On the government’s side, the Chancellor explained that much work had gone into putting public finances back in order, and they’re now ready to pump money into services, which includes housing.
He said: “We’re making good progress on building the homes this country needs with, last year, a 20-year record high for housebuilding. This is how we build an economy that works for everyone.”
However, this doesn’t fit with evidence regarding the number of affordable properties that have been built. Helen Hayes, MP for Labour said she thought it was astonishing that this amount of money is unspent when the number of affordable homes built by local authorities has plunged since 2010.
She said: “This is the biggest issue for families up and down the country. It is simply astonishing and unacceptable that there is so little urgency being shown.”
Since around 1988, local authorities have consistently cut back on social housebuilding due to the impact of increasing budget cuts. Councils have also been discouraged from building new houses by the government’s ‘right to buy’ scheme, which lets tenants buy council properties at a discount of 40%.
Council development companies
Many councils have implemented their own property development companies to get around the rules set by government, so that they can get on and build homes. However, progress has been limited, partly die to the threat from the government that they might extend ‘right to buy’ to the new development companies owned by the council.
While shadow housing minister John Healey said that housing and local government secretary Sajid Javid’s department is ‘selling families short by surrendering much-needed cash for new homes’, a housing ministry spokesman said: “We are investing £9bn in affordable homes, including £2bn to help councils and housing associations build social rent homes where they are most needed.
“All of the affordable housing underspend from 2016-17, including £65m returned by the Greater London Authority, has been made available to spend on similar schemes.”
Potential council insolvency
The National Audit Office estimates that 10% of local authorities and county councils have less than three years left before they are vulnerable to insolvency. It seems many people agree that urgent action is now needed.
Some developers have always been positive about affordable housing, yet have had their hands tied. At Fortitudo, we always strive to be part of the solution for people who need affordable homes, and hope that the government will act to make it easier for their own housing goals to be met.
Last month the government outlined planned changes to planning legislation in the UK to tackle the shortage of houses. The plans show that councils that don’t build enough homes will lose the right to decide where new houses should be positioned.
Nicknamed ‘nimby’ (not in my back yard) councils, local authorities who don’t meet targets are to be watched by the Ministry of Housing Communities and Local Government to ensure this changes.
New legislation will see councils issued a target for the number of homes they must build every year, taking into account wages, house prices and the number of key workers (for example, police officers, teachers and nurses) in the area.
Where an area has higher ‘unaffordability ratios’, higher targets will be set for the relevant local authority. Should they fail to deliver on the target, the council will be stripped of its planning powers.
The housing revolution
While the announcement received some mixed reactions in the industry, it’s clear that we do have a housing crisis. It was discovered recently by The Independent that the 2014 initiative designed to get people on the housing ladder is failing.
The Starter Home Initiative was described at the time as a ‘major push’ to get people in their first home and further said it would include “innovative changes to the planning system” to “allow house builders to develop under-used or inviable brownfield land by freeing them for planning costs.”
Four years later, not a single property has been built under this scheme, and officials now call it an “ambition”. Many point towards the lack of accountability for councils to deliver on their promises in terms of houses, something that the new legislation is designed to change.
Reaction to announcement
In the immediate aftermath of the speech, share prices for the biggest housebuilders went up, while industry leaders expressed some notes of caution particularly surrounding involving the community in planning decisions.
At Fortitudo Property, we’re in favour of robust and sweeping reforms to tackle what has become a huge problem. As an example, the last time the UK reached the target the government has set for 2020 was in the 1970s when 300,000 homes per year were built.
To get back to this, government intervention is absolutely necessary both at a local and national level. Increasing the planning power in local authorities is an important step forward.
To use the planning power in the best way, councils should work directly with the national government to sort out problems in the current planning process. To maintain and implement a sustainable housebuilding development scheme, councils must avoid the ‘nimby’ approach.
It’s also vital that developers receive much more government support. There are problems in securing funding from banks which is slowing down the expansion of the housing market, and it’s good to hear the prime minister discuss our role as developers in the reforms.
If the government and councils can succeed in getting rid of the red tape prevalent in the planning process, then more land will be available to developers.
Home Building Fund
The government also proposed to sink £1.5bn into the Home Building Fund, which is also very important particularly for smaller developers. This influx of cash will reduce the number of developers that are forced to wait on available sites.
We very much hope that the government commits to these planned reforms, in the face of undoubted challenges. If these plans become watered down in a similar way to past policy changes, then nothing will change.
We need a radical transformation of the entire planning process, backed up by the government in order to achieve the sustainable housebuilding that the country needs. The announcements are very hopeful, however, and by empowering both developers and local authorities, the government is on the right track.
There’s no denying that Brexit has been a divisive issue since the referendum vote of June 2016. And while we don’t formally leave the EU until March 2019, there have been various effects on the economy and, of course, property.
While the initial burst of doom and gloom predictions surrounding the economy didn’t come to fruition, there has been a surge of interest in property around the UK which has boosted regional areas. Continue reading →
It was inevitable that some uncertainty would arise due to the Brexit vote in 2016. And while this once looked like it would threaten to overshadow the property market in the UK, experts are beginning to agree that momentum will pick up when we finally leave the EU in 2019. Continue reading →
Fortitudo Property has generated in excess of £5 MIllion as part of the Community Infrastructure Levy in Poole (CIL). And part of this goes towards the CIL Neighbourhood Portion fund that is earmarked specifically for local infrastructure projects to improve facilities including local open spaces and plan, transport, health, education and more. Continue reading →