First time buyers make up more of the mortgage market for fourth month in a row

Small deposit buyers continued to increase their share of the UK mortgage market in April 2017, the fourth month in a row they have done so, new research shows.

This group of buyer, which included most first time buyers, accounted for 21.5% of the overall market in April, up from 21.4% in the previous month and up from 16.1% in December 2016.

The details from the latest mortgage monitor report from residential chartered surveyors e.surv also shows that the overall mortgage market has grown in the last month, stopping the recent decline.

There were 67,035 loans approved in April, up compared to both last month and the same stage last year and the first monthly rise since November 2016, a rise of 0.3% month on month and up 1.7% year on year.

‘There was even better news for first time buyers and others with small deposits. That is not to say there aren’t significant challenges ahead, but data from the market this month is overwhelmingly positive,’ said Richard Sexton, director of e.surv chartered surveyors.

‘First time buyers are the lifeblood of the property market. Low rates and better availability have helped people buy their first home. Their presence then allows others to move up the ladder and keep the whole market moving,’ he added.

April was the third month in a row that the proportion of loans given to home buyers with large deposits was below the 35% mark. While market share increased slightly month on month, the trend in recent months has been towards small deposit and middle market borrowers.

Large deposit borrowers, defined as those with a deposit of 60% or more, took 34.6% of the market in April, slightly higher than the 34.4% recorded in March but still down on the high of 35.4% recorded in January.

‘There are historically low mortgage rates on offer across the board and this has helped the overall market grow this month. The proportion of borrowers with large deposits has improved compared to March but still remains below the 35% mark,’ Sexton pointed out.

When broken down on a regional basis, Northern Ireland saw more small deposit borrowers than anywhere else during April 2017 with 34.6% of the market. Only two other regions saw more than a quarter of loans go to small deposit borrowers, the North West where 31.6% of all loans went to this segment of the market and Yorkshire at 28.9%.

Northern Ireland, the North West and Yorkshire were the only three regions where there were more small deposit buyers than large deposit ones. In Northern Ireland 28.9% of loans went to large deposit buyers while in Yorkshire it was 25.4% and in the North West 24.3%.

Scotland saw the smallest proportion of loans go to first time buyers and others with small deposits. In total 18.4% of loans went to this part of the market in April, a smaller proportion than anywhere else in the UK. This was well below even London, where 20.2% of all loans went to smaller buyers.

London saw 38% of its mortgage approvals made to borrowers with a large deposit, the highest proportion recorded in this survey, followed closely by Scotland with 37.9%, he South East at 37.3%, the South and South Wales at 37.2% and Eastern England at 35.7%.

‘Northern Ireland is the best place in the UK to get on the ladder if you only have a small deposit saved. However, other regions such as the North West and Yorkshire have provided equally fertile ground for new borrowers so far in 2017,’ Sexton added.

http://www.propertywire.com/news/uk/first-time-buyers-make-mortgage-market-fourth-month-row/

Foxtons' property sales tumble by a third as London house buying cools

by Kate Palmer, Business Reporter
October 19, 2016 09:30 AM

Foxtons issued a profit warning in June, blaming uncertainty following the EU referendum

Foxtons’ property sales have plunged by a third in just three months as London homeowners shy away from transactions in the wake of higher stamp duty rates and fears over the Brexit vote.
The estate agency, which blamed a profit warning in June on the EU referendum, said revenue from property sales dropped 34pc in the three months to September 30 to £12.2m as it contended with lower transactions in the capital.

Higher rates of stamp duty, announced by the former Chancellor George Osborne last year, took effect in April, adding a 3pc surcharge on second-home buyers and buy-to-let investors.

It has hit London property owners in particular: average prices in the capital have now reached £489,000, compared with a country-wide average selling price of £219,000 in August 2016.

“We have built Foxtons to withstand sales market cycles,” said Nic Budden, chief executive. “The long-term fundamentals of the London property market remain very attractive and represent a huge opportunity for growth.”

Foxtons, which relies on its central London offices, also clocked lower demand from tenants but said its lettings division, which makes up more than half the business, helped buck the decline in property sales. Overall, the FTSE Small Cap group said revenue fell 14pc to £37.5m throughout July to September.
Despite worries that Brexit would hit the London property market, house prices continued to soar following the EU referendum in June. Prices increased 12.1pc in the capital in August, outpacing the annual rate of growth of 8.4pc across the country, according to the Office for National statistics.

However, some observers argue that the impact of Brexit is yet to affect official transaction figures, as sales can take several months to complete.

Foxtons insisted it would hit full-year sales and profit forecasts. Analysts currently predict the estate agency, known for the branded Minis driven by its agents, will post slightly lower sales of £145.2m in 2016 and profits of £27m, down from £41m the previous year.

Foxtons’ shares remained buoyant in morning trading, rising 1.5pc to 96p. But they remain 42pc below their level before the June 23 referendum.

http://www.telegraph.co.uk/business/2016/10/19/foxtons-property-sales-tumble-by-a-third-as-london-house-buying/

Night Tube to drive up London rents and property prices

The launch of the 24-hour tube service last month is pushing up prices of homes close to stations on the all-night lines, a London estate agent has revealed.

From 19 August, the tube started running past midnight on the Central and Victoria lines, making it possible for Londoners to avoid long journeys on night buses and expensive cab fares. The 24-hour service will soon be introduced on the Piccadilly, Jubilee and Northern lines.

Portico forecast that house prices will increase as a result of the Night Tube, particularly in areas at the end of the lines, such as Cockfosters, High Barnet and Walthamstow, which could see the biggest hike in home values.

The estate agency also expect to see rental values rise in areas benefitting from the new Night Tube, with the company pointing out that the highest rental yields on the network are already concentrated in the outer zones.

Hounslow West, close to Heathrow in Zone 4, has the highest existing rental yield on the Night Tube network at 5.3%, while fellow Zone 4 location Hainault comes in at a close second with 5.2%.

Stratford in Zone 3 has a rental yield of 5%, while Tottenham Hale and Stanmore – also both in Zone 3 – generate an average yield for buy-to-let landlords of 4.8%.

Mark Lawrinson, regional director at Portico, said: “The Night Tube will appeal to young professionals who work and party in central London but can’t afford to buy in Zone 1 or 2. The new 24-hour service will mean they can push further out to more affordable areas, while still maintaining the lifestyle they want, and without spending a fortune on taxis!”

https://www.landlordtoday.co.uk/breaking-news/2016/8/night-tube-to-drive-up-london-rents-and-property-prices

Cash boost for rent-to-buy provider

Affordable housing provider Rentplus has secured up to £70 million funding to support the delivery of thousands of new rent-to-buy homes
 
The funding will help Rentplus deliver 580 homes out of its initial target to build 5,000 new affordable homes by 2020.
 
BAE Systems Pension Funds Investment Management Ltd (“BAE Pension Fund”), through two of its pension funds, has approved an initial £35 million private placing of an inflation linked bond for the Plymouth-based company with the possibility of an additional £35 million commitment.

Rentplus, which currently has a national pipeline of 8,500 homes, will use this funding to help tackle the UK’s housing affordability crisis. The company provides aspirant home owners with privately funded intermediate affordable rent-to-buy housing, with real prospects to achieve ownership benefitting from affordable rents (80% of open market rent) and a 10% gifted deposit from Rentplus.
 
The Rentplus model provides its tenants with the option to purchase their home after five, 10, 15 and 20 years of their tenancy period, with all homes sold after 20 years. Rentplus aims to replace all homes that are sold in order to maintain the level of affordable housing in the area at the required level.
 
Rentplus requires a total of £1 billion of institutional and pension fund investment in order to deliver its ambitious 8,500 pipeline and is in conversations with a number of other potential funding partners.  

The funding from BAE Pension Fund is the first to contribute to that target. The Rentplus model provides steady growth through the virtuous circle of investment in a local area (homes being sold after 20 years and then replaced by Rentplus) and the mixture of rental income and capital return.
 
Numis Securities Limited advised Rentplus on the raising of this funding. Savills plc acts as property adviser to Rentplus.

John Gildersleeve, chairman of Rentplus, said: “As is widely recognised, the current affordable residential property market model in this country is not working. Home ownership is overwhelmingly the first choice across the UK, however 48% of households in the 25-34 age group currently live in the private rented sector compared to 21% in 2003-04. 

“The primary reason is lack of affordability, the driver of which is lack of affordable housing supply. We must therefore fix the model and innovative solutions such as Rentplus’s intermediate rent-to-buy are absolutely crucial in a climate where rents are increasing and deposits required to buy continue to climb – reports earlier this year put the average deposit to buy a home at more than £80,000.  Our rent-to-buy model is designed to solve both of these issues.
 
David Cryer, portfolio manager at BAE Pension Fund, said: “We are delighted to provide the first tranche of institutional funding for Rentplus. Rentplus offers a great solution for local authorities and housing associations to provide an affordable housing product – we have a strong commitment to both sectors and therefore this is an excellent fit for the pension fund.
 
“Having worked closely with Rentplus to create a funding strategy to suit both sides, we look forward to continuing our excellent relationship.”

https://www.landlordtoday.co.uk/breaking-news/2016/4/cash-boost-for-rent-to-buy-provider