First-time buyers outnumbering buy-to-let purchasers by three to one

There were 311,700 mortgages issued to first-time buyers last year. While the figure was the same as 2014, the amount borrowed – £46.7bn – was the highest since 2007.

Home movers took out 365,800 loans for house purchase, down fractionally (0.2%) on 2014. Again, though, the amount, at £72.1bn, was the highest since 2007.

Buy-to-let lending rose by both volume (up by 28%) and by value (up 39%), and that too was at its highest since 2007.

Despite the rise in buy-to-let lending, last year first-time buyers outnumbered buy-to-let purchasers with mortgages by three to one.

Only 41% of buy-to-let mortgages were for house purchase, a total of £15.6bn. The bulk of buy-to-let lending was in the form of re-mortgaging – something which buy-to-let borrowers constantly do as they seek out better deals.

Separately, the Office for National Statistics has said that average house prices ended last year at £301,000 in England, £175,000 in Wales, £193,000 in Scotland and £148,000 in Northern Ireland.

The highest average house price in England was in London at £536,000, and the lowest was in the north-east at £155,000.

The ONS puts annual house price inflation last year at 7.3% in England, 1.0% in Wales, -0.2% in Scotland and 1.5% in Northern Ireland.

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Rents and landlords’ returns both rise – but the big challenge is Stamp Duty

A recent report said rents are accelerating this year, with rents up 3.6% in January on an annual basis. Further, taking into account both rental income and capital growth, the average landlord in England Wales saw total gross returns of 12% in the 12 months to January.

That equates to an average of £21,988. The average capital gain contributed £13,594 while rental income made up £8,394.

Apparently stamp duty premiums on new buy-to-let purchases are the big challenge.

The 1st April deadline and the extra purchase costs are perceived as a potential threat.

Landlords are long-term investors and generally take good advice before making a new purchase so any disruption to investment in supply is likely to be short term.

Separately, the Council of Mortgage Lenders said the buy-to-let sector is going through an uncertain period as it is unclear how changes to the tax treatment of the sector will affect it.

It said that current demand for homes was being led by buy-to-let landlords. It expects to see a “modest fall” in total activity in the second and third quarters of this year.

The CML also reported an estimate of £17.9bn mortgage lending in January, 21% up on last year and the highest lending total for a January since 2008.

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‘Most home owners would choose traditional agent to sell their home’

Most home owners would choose a traditional estate agent if they had to sell today, a poll has found.

However, a significant proportion would go the online route – and younger people would actively choose an online agent rather than a full-service one.

The poll asked: “If you were choosing an estate agent today, do you think you would go for an online estate agent with lower costs, or a traditional estate agent with local premises that you can visit?”

Out of the 1,000 who were polled, 349 said they would choose an online agent, 592 said they would go with a traditional agent, and just 59 said they would choose neither – suggesting that the private sales route has yet to get much traction.

The online option was slightly more popular with men than women (178 to 171), while 318 women compared with 274 men favoured traditional agents.

Because of the small number of home owners aged between 18 and 24, only a total of 26 views could be garnered in this age group.

However, 13 would choose an online agent, compared with 11 who would go with a traditional agent, and two would choose neither option.

The poll also asked the home owners what they wanted most from an estate agent.

Most chose getting the “right price” as most important – 461; a further 216 wanted knowledge and experience, and 188 chose excellent communication.

The remainder chose other options.

All the older age groups chose the agent’s ability to value and get the right price for their home as their top priority.

However, the top priority for the youngest age group was excellent communication. This was also the age group least likely to rate knowledge and experience – something which counted heavily with the oldest age group of 55 pluses.

The survey was carried out last summer by OnePoll for its client, Face for Business, a telephone answering service.

A spokesperson for Face for Business said: “Online estate agents are experiencing more rivalry/competition than ever, but traditional is still the preferred choice of home owners.

“People want to see estate agents and need face to face communication.”

She added that the firm may recommission the survey.

http://ffb.co.uk/

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It’s a stampede! Investors rush to beat Stamp Duty deadline

There is resounding new evidence that buy-to-let investors are ramping up activity as they try to beat the April 1 Stamp Duty surcharge deadline.

Also, more individuals appear to have turned themselves into companies in order to be exempt from an earlier clampdown announced by George Osborne last year.

According to specialist broker Mortgages for Business, limited companies accounted for 43% of all buy-to-let cases in January – up from 38% at the start of the year.

Overall buy-to-let applications were up 27% in January from the month before.

From April 1, a 3% Stamp Duty Land Tax surcharge will be levied on the purchasers of second homes, including buy-to-let properties.

Also looming is the start of the phased introduction by which landlords’ ability to offset mortgage interest against tax is to be cut to the lowest rate. However, buy-to-let companies will be exempt from this.

David Whittaker, managing director of Mortgages for Business, said: “Landlords have woken up to the fact that transacting via a corporate vehicle is a feasible option, and in many cases, the most prudent route going forward.

“I wouldn’t be surprised if the percentage continues to rise as landlords, especially those paying the higher tax rate, prepare for the forthcoming changes to relief on finance costs.”

The total number of buy-to-let mortgage applications (made by both individuals and limited companies) rose by 27% in January compared to December 2015.

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IMPORTANT REMINDER: All landlords and letting agents in England to make Right to Rent checks from Monday

All landlords & letting agents in England are reminded that as from Monday (February 1) they will have to perform Right to Rent checks on all prospective tenants.

David Cox, managing director of ARLA, warned that agents who have already agreed contracts or agree some over this weekend for tenancies starting on or after Monday will need to be compliant.

He also warned that referencing agents cannot do the legal checks. He said: “All they can do is check the documents are genuine. All identification checks need to be done by the letting agent.

“Also remember it’s not just tenants who need to be checked. It’s all adult occupiers in the property.”

The checks on immigration status can be carried out by landlords or, as long as it is agreed in writing, by agents. If that is the case, letting agents should put a clause in their contracts that they will carry out the Right to Rent checks.

The checks can be made within 28 days before the start of a new tenancy agreement authorising occupation.

Right to Rent responsibilities do not end with checking prospective tenants’ immigration status. There is also a duty to copy documents such as passports, and keep the documents throughout the tenancy and for one year afterwards.

The Right to Rent regime, under the Immigration Act 2014, carries civil penalties of up to £3,000 fines.

However, the new Immigration Bill currently going through the Lords will bring in criminal penalties for landlords or agents.

A number of peers have expressed considerable concern.

Tory Lord Howard of Rising said: “I find it a bit rich that landlords should risk imprisonment for housing an illegal immigrant when it is the Government’s failure in their duty to protect the borders of this country that has resulted in the illegal immigrant being here in the first place.

“I fully understand the difficulties in controlling our borders, which will inevitably lead to errors, but should the person responsible for the error go to prison?

“If those responsible for allowing illegal immigration should not go to jail, why should a landlord?”

He went on: “It is not unreasonable for landlords to play their part in helping with the problem of illegal immigration, but what they are asked to do should be reasonable and proportionate.

“Landlords being subject to imprisonment for something over which, in practical terms, they can have little or no control is not reasonable.

“I point out that the people most affected by this will be that huge army of very small landlords who do not have agents to act for them.”

Another Tory, Lord Deben – formerly John Gummer – said: “There is a fundamental concern about this legislation.”

He called for a delay to Monday’s national introduction of Right to Rent, saying that there needed be a pilot scheme, independently evaluated and “shown to have a real effect on illegal immigration”.

Information for landlords and agents on Right to Rent, as it will operate from Monday throughout England is available here.

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Christies Network Auctions Conference deemed a success

The popularity of property auctions in the UK has increased enormously in recent years, providing sellers with an alternative means of disposing of property, as well as providing estate agents with yet another potential revenue stream, not to mention an opportunity to add an extra string to their bow in terms of the services that they provide their clients with.

While there is little to stop an agency setting up their own auctions department, many opt to establish links with one or more experienced auctioneers, which may explain why Christies Network Auctions’ partner agent conference at the Grosvenor House hotel in London last week was so well attended.

More than 60 partner agents from all over the UK attended the event, which included presentations from a host of leading industry figures, including David Sandeman of the EI Group, industry trainer Tim Wakelin and property industry mentor Michael Day of Integra Property Services.

The conference also saw the launch of Christies Network E, which is a new method of sale that enables sellers for whom a traditional auction process is unsuitable, to still benefit from the certainty and speed of the auction process.

An online bidding system creates an exclusivity agreement upon the fall of the electronic gavel and a fixed exchange date is set. In the unlikely event of a transaction failing to reach exchange because the buyer defaults, the deposit is shared between the seller and the agent.

Christies Network Auctions has already successfully sold property through the Christies Network E system and it was well received by people at the conference. 

Toby Limbrick, Managing Director of Network Auctions, said, “The conference was a great success and exceeded our expectations. Feedback on all aspects of the day and, in particular the quality of the content, was excellent and I have no doubt that our partners are now even more enthused and equipped to differentiate themselves in the market and enjoy even more success in 2016.”

With more buyers armed with their cheque book now packing in to auction rooms up and down the country, competition among bidders is growing, driving up property sale prices in the process, with many lots selling, as reflected by the average sales success rate of 82 per cent achieved by Christies Network Auctions in 2015.

During 2015 Christies Network Auctions’ partner agents received a ticket for every lot entered in an auction. The winning ticket was drawn at the conference by Network Auctions’ Penny Nichol and Hartwell Partnership from Aylesbury went home with a cheque for £3,000.

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UK house prices set to rise in 2016

Monica Bradley - MB Associates - IFA

With record-low interest rates for at least another few months and housing supply set to remain low, the general consensus among households across the UK is that property prices will increase in 2016, albeit at a slower rate than in 2015.

The latest data from the House Price Sentiment Index (HSPI) from Knight Frank and Markit Economics found that house price growth this year is expected to be led by the East of England and London, with more modest levels of price increases set to be recorded in many other parts of the UK.

The future HPSI, which measures what households think will happen to the value of their home over the next year, increased marginally this month to 70.5 from 70.3 in December. This is the highest reading since June 2015, but remains below the peak of 75.1 reached in May 2014.

Expectations for residential property price growth among households in the East of England hit an all-time high of 81.1, suggesting that they expect to see the highest rise in property values over the next year.

Home prices in London, where an average HPSI reading of 79.1 was recorded, is also expected to outstrip the national average.

In contrast, there was a noteworthy fall in the future reading for the North West, down from 67.5 to 62.3 in January, as well as Scotland, which dropped to 61.8, down from 65.8 in December.

Home owners with a mortgage outstanding expressed the greatest confidence that home prices will increase over the next 12 months at a reading of 76, followed by those who own their property outright at 73.1.

“Mortgage borrowers are the most positive about the outlook for house prices over the next year, perhaps reflecting the anticipation of a longer period of ‘ultra-low’ rates after the Bank of England’s decision to hold rates this month, and signals from rate-setters that the UK base rate could be at 0.5% for some time yet,” said Gráinne Gilmore (left), Head of UK residential research at Knight Frank.

The future sentiment index is now sitting just above where it was in January 2015, Gilmore explained, pointing to the fact that UK house prices rose by 4.5 per cent during the course of the year.

“The latest house price sentiment index suggests that monetary and political housing policies have not had a dramatic impact on households’ assessment and outlook for the value of their property,” she added.

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