The Latest Property News

UK homeowners now adopting European rental habits

Thursday, 07 January 2010

UK homeowners are increasingly adopting the habits of Continental Europeans who often rent their homes, as 1.75 million state they would now consider selling their home and renting because of the housing market crash, according to research from Unbiased.co.uk.

Of these 1.75 million homeowners, 32% stated they had not considered doing this in the past. A further 31% said they would consider selling their home and renting but weren't able to do so at the moment as the price they would get for selling their home was too low.

Almost a third (31%) of those who already rent their home, believe that with the recent volatility in the housing market, renting gives them more freedom without the hassle of owning their own home.

More than one in ten (12%) state they now no longer aspire to the status symbol of owning their own home after the recent property market crash. Some 6% of renters have been put off buying due to the property market crash and 7% have been financially unable to buy due to the property market crash.

Only just over one on ten renters (13%) state the property market crash has not put them off buying, and they are still hoping to purchase their own house.

Owning their own home appears most important to the younger generations, with 22% of those aged between 18 to 34 still hoping to buy. The older generations of renters are less interested in buying after the property market crash, with only 6% of those aged between 35 to 54 and 2% of those aged 55 or over stating they are still keen to stop renting and buy their own home.

Karen Barrett, Chief Executive of Unbiased.co.uk said: "While there are mixed messages as to whether house prices are now starting to rise again, it is clear that the property market crash has had a profound effect on the way people view their homes. For many who own their own home, the worry and stress of this through the property market volatility has caused them to re-think about whether long-term renting is a viable option for them.

"It has also caused renters to think about their long-term options, and while some still want to get on the property ladder despite the recent crash, many have now decided that the British status symbol of owning your own home no longer has the same importance."

Rise in new mortgage sales hides 'two-speed market' as homeowners fail to refinance

Rebecca O'Connor, Property Correspondent, The Times - December 11, 2009

The number of mortgages taken out to buy a home rose to the highest level for almost two years in October as the housing market continued to rally.

The Council of Mortgage Lenders said that 55,000 mortgages were taken out for purchases in October, the highest monthly total since December 2007. The figure is more than double the January 2009 low of 23,000 and is a 9 per cent rise on the previous month.

The number of home loans advanced to remortgage borrowers and first-time buyers remained unchanged between September and October. However, the figures were viewed as a sign that low interest rates for those with large deposits, together with recent house price rises, are encouraging those who are able to move to take advantage of the favourable market conditions.

The number of loans to home movers - a group that does not include first-time buyers - rose by 15 per cent between September and October, with the bulk of borrowers opting for tracker mortgages as evidence grows that interest rates are set to remain low for the long term.

Michael Coogan, director-general of the Council of Mortgage Lenders, said: "We are still in a two-speed mortgage market. It appears that low interest rates for those with substantial deposits, coupled with this year's sustained increases in house prices, are encouraging more people to buy or move.

"But the same low rates that are driving house price activity provide little incentive for borrowers to refinance their loans. This, coupled with tightness in lending criteria, continues to hold back the remortgage market."

Signs from the mortgage market indicate that credit conditions are easing and that lenders are more willing to lend.

Friday 4th December

In the last eight months, while bank base rate has been kept on hold, the total number of residential mortgages available has increased from 1209 to 1624, the majority of which being two-year fixed-rate deals.

Average rates on two-year fixed deals continue to see significant falls, standing at 4.93% today.

Rates remain less favourable on longer term deals, where the average five-year fixed stands at 6.15%. The average three-year rate continues to increase, standing today at 5.60%.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said: "In such uncertain times, borrowers and lenders alike seem to prefer shorter-term deals, where changes can be made relatively quickly if market conditions change dramatically.

"If lenders maintain the increased margins they have placed on mortgage deals, this short-term view is likely to prove more expensive for borrowers in the long run.

"Increased competition in the two-year market has increased the competitiveness of the deals available, but at £928, the average arrangement fee remains more than £100 higher than on longer deals.

"Borrowers' love affair with shorter-term deals means lenders benefit from the increased frequency with which arrangement fees become payable.

"Lenders appear to be discouraging borrowers from taking medium to longer term deals by charging higher rates, as extended periods of repayment, together with uncertainty over the economy in the medium term, bring a higher risk of default.

"By opting for a five-year deal, borrowers are likely to benefit from a more stable mortgage market when they come to remortgage. Increased equity in their homes from rising property prices will increase their chances of being eligible for a more competitive deal at a lower LTV band."

Buy-to-let lending increased in the third quarter of 2009 - it was ten per cent higher than in the previous three-month period.

Friday 20th November 2009

That is according to the Council of Mortgage Lenders (CML), which said this data represents the first increase in gross lending in the sector for two years.

Lending totalled £2.1 billion in total, while the number of buy-to-let loans advanced grew from 21,600 to 23,700 between the quarters.

The CML's director general Michael Coogan said the figures show that buy-to-let is here to stay.

"Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome." he added.

John Heron, managing director of Paragon Mortgages, said the data shows how strong and resilient the buy-to-let market is. He claimed that the sector has proved it can cop in a tough economic period

The recession is now officially over for buy-to-let as mortgage lending to the sector picks up once again and landlords look to take advantage of more affordable property prices and high tenant demand.

Friday 20th November 2009

That is the claim from website Lettingsearch.

Buy-to-let investors are beginning to fight their way back into the property market as prospects for the sector improve following a sustained period of restricted financing and, until recently, weak rental yields.

With banks finally increasing their buy-to-let lending in quarter three, a period of sustained investment in the industry is set to follow.

Many professional landlords still have liquid cash available to invest and are now likely to look to expand their portfolios over the next few months, buying property at the more affordable levels before prices climb too far. Investments in other asset classes continue to under-perform, and as a result, City bonuses will also be channelled into investment property, bolstering the buy-to-let sector further.

Investment in the sector will be underpinned by strong and rising tenant demand for lettings accommodation, as homeowners and first-time buyers turn away from the sales market and will fuel heightened activity in the property market as a whole.

Phil Calderbank, Director at lettingsearch.co.uk, said: "Mortgage lenders are once again recognising the important role lettings has to play in the property market and as investors with liquid cash make a move to take advantage of affordable property, strong tenant base and improving returns, I think we can safely say that the recession is now over for buy-to-let.

"Many so-called reluctant landlords have discovered a new income stream and we believe some of these people will stay in buy-to-let and even expand their portfolio. This will further strengthen the buy-to-let sector.

"The current rate of house building cannot meet the demand from potential buyers, and while lending to homeowners remains scarce and the uncertainty over unemployment looms on the horizon, we will see people choosing lettings from every rung of the ladder."

The recent reduction in rental market stock could lead to "quite strong rental growth" in the long term, according to one property industry expert.

Friday 20th November 2009

Lucian Cook, director of residential research at estate agent Savills, said that there are various other reasons why the private rented sector is set to increase in size.

He explained that a number of would-be first-time buyers will be "effectively excluded" from buying property due to mortgage constraints and deposit requirements.

These people will therefore spend more time renting homes, which will boost demand for landlords' services.

His comments came after various industry organisations - such as the Association of Residential Letting Agents - claimed that the so-called accidental landlord phenomenon from earlier in the year has started to fade away, with those who were forced to rent out property now looking to sell it instead.

"I suspect that you will see stock on the rental market become eroded over a period from here on in [and] get back to much more normal levels," Mr Cook remarked. "I suspect that will also bring some degree of stability into rental levels."

Property website Zoopla has now successfully completed the integration of all of its websites onto a single "super portal".

Friday 20th November 2009

The firm said that it would offer enhanced services to its users with more features for consumers and greater exposure and leads for its agent members.

As a result of combining the best features from each of the websites in its stable – PropertyFinder.com, HotProperty.co.uk and ThinkProperty.com – Zoopla.co.uk will now offer a range of new services to the millions of home movers who visit the website each month and a far broader audience for its thousands of estate agent members.

Zoopla CEO Alex Chesterman said: "Following our acquisitions over the summer, it was important for us to consolidate onto a single brand and technology platform as quickly as possible in order to deliver the benefits to our users.

"We have taken the best-in-class features of all of our websites and combined these to deliver on our goal of offering consumers the UK's best property market resource and our agent members the most efficient source of applicant leads, appraisal leads, exposure and tools to help them win more business."

Investors have opted to buy more property over the last year, new research from the Association of Residential Letting Agents (Arla) has revealed.

Friday 20th November 2009

The study indicated that the average residential landlord investor has boosted their property portfolio from 6.3 to seven homes in less than 12 months.

According to the survey, buy-to-let investment has almost doubled in the last five years, with the average number of properties per landlord increasing from four in 2004 to its current level.

Ian Potter, operations manager at Arla, said: "Low interest rates and proportionately higher rental yields are making the buy-to-let market attractive again to experienced investors."

The 0.5 per cent Bank of England interest rates Mr Potter refers to are expected to be kept at the same level for the rest of the year and most of 2010.

Indeed, many economists are predicting that the cost of borrowing will stay at this record low throughout next year.

Buy to let landlords are now being rewarded

Tuesday 3rd November 2009

Buy to let landlords who have stayed the course over the last eighteen months, as the 'accidental landlord' phenomenon flooded the rental market with homes, are now being rewarded with rising rents and a dramatic reduction in stock levels.

According to the FindaProperty.com October Rental Index, the number of rental properties on the market plunged by 10% between September and October, following a 6% fall the previous month, bringing supply back to the level last seen almost a year ago.

An oversupply of flats has been one of the main factors distorting the rental market over recent months, and October saw a significant correction in flat rental stock which fell by 12%. This is likely to be partly due to a seasonal surge in demand from students and graduates requiring lower-cost rental accommodation.

In addition, a number of agents such as Marsh & Parsons and Townends report that the strengthening sales market, which enjoyed a further 0.7% rise in house prices this month, is now attracting a rush of sellers who have been temporarily renting their properties as they wait for house prices to recover.

Rents climbed by 0.1% this month to £830, continuing the clear trend of recovery since April as competition increases among tenants seeking homes to rent. This increased demand is also reflected in the number of days properties are taking to let, which now stands at just 58 days compared to 71 days at the start of the year.

Michael O'Flynn, Director at FindaProperty.com, said:

"Buy to let landlords have had a tough time over the last eighteen months, but those who have managed to hang on in the rental market, despite a dramatic oversupply of properties, falling rents and rising unemployment among tenants, are now breathing a sigh of relief.

"Despite the fact that the economy remains uncertain and unemployment is still rising, the oversupply of rental properties is correcting itself almost as quickly as it occurred, and as long as the sales market continues to strengthen this clear out of stock is likely to continue. Rents are on a clear road to recovery with six consecutive months of stable or rising prices. Provided the 'double dip' theory of a second fall in sale prices doesn't come to fruition, landlords could be set to enjoy a further recovery in rents over the coming months."

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