First time buyers on the rise, buy to let mortgages falling
The National Association of Estate Agents' most recent housing market report, for June, flagged up that the proportion of sales to first time buyers had increased, by 5%, to 29%, the highest amount recorded since February.
According to figures from UK Finance, a lobby group for the financial services industry, there were 32,200 new mortgages completed for first-time buyers over the month of May, an increase of 8.1% year on year, and the £5.4bn of new lending was up 12.5%.
However, the number of new buy-to-let mortgages fell by 9.8% in May compared with a year earlier to 5,500. Lending was £700m, 22% lower than for May 2017.
Buyer demand decreasing
The NAEA's report, while providing further evidence that sales volumes were increasing, also noted that demand from prospective buyers decreased from 351 in May, to 308 in June. This was the lowest number of buyers recorded by the NAEA since March this year and 20 per cent lower than June 2017, when
384 buyers were registered per branch.
Nearly four fifths of all properties sold for less than asking price
The NAEA also noted the continuation of the trend for most houses being sold at less than asking prices, with some 79% falling into this category.
Self-employed mortgage volumes on the increase
A prominent large UK lender noted that mortgage products it had sold to self-employed applicants doubled during the six months to 30th June 2018, giving more evidence that lenders have successfully started to develop products to this growing sector.
Additionally, 40% of all mortgages on offer are now arrangement fee-free, up from 33% two years ago, according to Moneyfacts.
Radical proposals for leaseholds from Law Commission
The Law Commission released a number of radical proposals for leaseholds during the month, with a full consultation paper set to be released in September. The proposals are thought to be linked in particular to perceived abuses associated with the 1.4 million leasehold houses in the UK, including the matter of doubling ground rent. However the suggested measures are wider and consider general matters such as lease extensions.
The stated proposals were as follows:
- options for reducing the price that leaseholders pay to the landlord such as by changing the formula used to calculate the cost, following the Government’s request to set out ways that the price could be reduced
- improving the right for leaseholders of houses to buy the freehold from their landlord
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introducing an alternative right to purchase unlimited longer lease extensions without a ground rent – of (say) 125 or 250 years
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making the enfranchisement procedure simpler to understand, to minimise disputes and prevent leaseholders falling into legal traps
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removing the requirement that leaseholders must have owned the lease of their house for two years before making a claim
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potentially scrapping whether leaseholders should contribute to their landlord’s legal costs, and if not, capping the contribution at a fixed maximum amount
Andrew Boast, co-founder of SAM Conveyancing, said:
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We are now seeing an increase in sales volumes alongside price rises in the housing market, something that will please most housing market professionals. Additionally there is good news for first time buyers, with their relative and absolute numbers increasing and those who have bought recently have enjoyed the stamp duty waiver.
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However the rise in base rates might prove to be a retardant in the medium term, particularly if there are further rises. And with no-one really sure of the Brexit path, this temporary uplift in the market mood might prove to be short-lived.
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We particularly welcome the Law Commission's proposals for the leasehold market, particularly if they address the many abuses which accompany leasehold houses. Swift action would be ideal, however it's accepted that realistically nothing will happen 'overnight'.
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* all figures quoted are the most recent from the Land Registry unless otherwise stated.
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