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Rise in first-time buyers searching for buy-to-let properties

Demand has grown among first-time buyers who want to enter the buy-to-let market, according to Legal & General Mortgage Club.

Data from its mortgage criteria search tool found the search combination for first-time buyer, first-time landlord and non-owner occupier increased by 18 per cent since the start of September.

The mortgage club also found that ‘holiday lets’ was the second most searched for term among advisers this month.

According to Legal & General, its findings showed many first-time property investors were looking to purchase buy-to-let properties in response to an increase in demand from consumers to holiday in the UK, rather than abroad, amid international travel restrictions.

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Kevin Roberts, director at Legal & General Mortgage Club, said: “Despite the impact of coronavirus, we are seeing rising demand across the housing market with buy to let in particular enjoying a mini-boom.

“Our latest findings from SmartrCriteria suggest a growing number of first-time buyers are searching for mortgages for buy-to-let ventures, including those engaging with the growing trend towards staycations this year.”

Mr Roberts added: “Amidst this continued high demand we are seeing in the mortgage market, thousands of borrowers are clearly turning to independent advisers to help them with their plans and these experts are playing a vital role for consumers”.

Akhil Mair, managing director at Our Mortgage Broker, commented: “The data L&G have shared today is a very accurate reflection on the type of business and enquiries we have been receiving in the last few months.

“We are witnessing an unprecedented amount of first-time buyer, first time landlord enquiries, including expat and foreign nationals wishing to invest in the UK property market.”

Mr Mair added the “huge interest” his firm had encountered was due to incentives such as the stamp duty holiday.

By Chloe Cheung

Source: FT Adviser

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Lockdown results in positive financial impact for a third of first-time buyers

A third of first-time buyers across the country have revealed that the lockdown has resulted in a positive impact on their finances, with this group of property hunters making up a third of those hoping to purchase a property in the next 12 months according to analysis from money.co.uk.

In regards to location, the data shows that over a quarter (28%) of first-time buyers are looking to purchase a home in London in the next year, with Barnet being the most sought after area for Help to Buy purchases. The top five London hotspots for first-time buyers also include Tower Hamlets, Lewisham and Greenwich.

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Additional insights reveal that the process of taking out a mortgage has become more difficult during the pandemic. Of those who have applied for a mortgage, 44% have claimed that there has been a reduced number of mortgage products available to them.

Salman Haqqi, personal finance expert at money.co.uk, said: “Since the UK went into lockdown in March, we have seen a huge impact on the property sector as a whole. However, following the recent reopening of the market, there has been an increase in the number of people purchasing the properties they had to put on hold due to COVID-19 restrictions.

“For those looking to buy, there are currently fewer mortgage products available than pre-COVID-19 but there are still some good deals to be found. With the base rate at a historical low at the moment, prospective buyers should really do their homework and research their options.

“If they have any doubts, they should speak to a mortgage advisor to ensure they are getting the right deal for their personal affordability, and circumstance.”

Source: Property Wire

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Leeds cuts rate for first-time buyers

Advisers have welcomed changes made by Leeds Building Society to its high loan-to-value product in a bid to help first-time buyers.

The society made a 0.4 per cent rate reduction on its 95 per cent loan-to-value mortgage.

The no-fee, 2.84 per cent two-year fixed rate mortgage comes with a free standard valuation, and a 1.25 per cent discount at the end of the fixed-rate period, for a further three years.

Matt Bartle, director of products at Leeds Building Society, said: “Our 95 per cent LTV mortgage has been designed with first-time buyers in mind, and this latest rate reduction will be very appealing to those looking to get onto the property ladder this year.

“With no completion fee, and free valuation as standard, we’re helping to keep costs down.

“We understand the importance of affordable housing, which is why we’re always looking for ways to help buyers with smaller deposits, alongside Help to Buy and Shared Ownership mortgages, which complement our range of deals at higher LTVs.”

Advisers called the building society’s mortgage rate changes “one to watch” and welcomed the move, although expressed caution in the uncertain economic environment.

Adam Hosker, founder of Bespoke Finance, said: “Leeds Building Society is always one to watch. A high street lender that is innovating on a solid product foundation. With further movements expected, the team is always eager to read Leeds’ updates.”

Martin Stewart, founder of London Money, commented: “It is a good rate and will get Leeds very close to the top of the best buy tables. Lenders are always tweaking their rates and sometimes they are up and other times down.

“We are still in a very benign interest rate environment so changes either way are often minuscule. It’s one thing having cheap money though and another thing altogether being able to borrow it.

“I have always been wary of high LTV products and even more so in the current environment where the Boris bounce could easily become a dead cat one overnight.”

Sebastian Reimann, mortgage, protection and equity release adviser for Libra Financial, agreed. He said: “This is great news although I see little demand for high LTV products. The sweet spot is probably at around 85 per cent LTV now, although I appreciate that’s not an option for everyone.”

By Simoney Kyriakou

Source: FT Adviser

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Signs emerge of property market recovery as mortgage completions rise

Mortgage completions for first-time buyers, home movers and landlords ended last year on the rise.

Data from trade body UK Finance shows there were 29,490 first-time buyer mortgages completed in December, up 0.3% annually, while the number of home mover loans increased 3.2% to 29,400 compared with a year before.

There were 5,700 new buy-to-let home purchase mortgages completed in December 2019, up 3.6% annually.

Commenting on the figures, Sam Harhat, head of financial services at Andrews Property Group, said: “This latest data shows that chaos can often be a catalyst for action.

“While the closing stages of 2019 were among the most volatile for decades politically, many people decided to cut their losses and move home before any further potential upheaval.

“There’s a sense that first-time buyers were particularly wary that if our departure from the EU didn’t bring the roof in, they could soon be left behind.

“Fears of Brexit ultimately proving benign and the market rebounding caused many first-time buyers to make their move in 2019.

“What’s also encouraging is that buy-to-let completions were also up on the previous year. The buy-to-let market appears to have stabilised and is showing it has got fight left in it yet.

“Since the second half of January, the new climate of political certainty has unleashed a lot of pent-up demand.

“Mortgage approvals look set to continue to pick up during the Spring, with the aspirational buyers that have been missing for so long taking up the slack.”

By MARC SHOFFMAN

Source: Property Industry Eye

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UK’s most popular property hotspots for first-time buyers revealed

The London Borough of Barking and Dagenham has been crowned Britain’s most popular area for first-time buyers, according to new research.

Property site Zoopla analysed demand from first-time buyers over the past three months to create the list of locations with the highest percentage of demand from people identifying as first-time buyers.

Outside of London, Leicester comes out on top for first-time buyers in the East Midlands, Bristol is the most popular location in the South West and, in Scotland, Midlothian is the most popular hotspot for those looking to buy their first home.

A noticeable trend across the most popular areas is that they are within reach of the UK’s biggest cities but still relatively affordable. For example, first-time buyers who want to live in Manchester are looking at up-and-coming Oldham instead of the city centre, whilst those who want to live and work in Birmingham are interested in near-by Wolverhampton.

The cost of getting on the property ladder varies across the UK. First-time buyers in the number one hotspot of Barking and Dagenham are looking at properties priced at an average of £300,000 ($390,000) and would need a deposit of £45,000 and an income of £56,667 to buy, the research found.

In Yorkshire and the Humber, where Bradford is the most popular location, the typical first-time buyer inquires about properties priced at £110,000 and would need a deposit of £16,500 and to be earning £20,778.

Richard Donnell, research director at Zoopla, said: “First-time buyers are the largest buyer group in the housing market, accounting for close to two in every five sales.

“Low mortgage rates and increased availability of higher loan-to-value mortgages have supported the growth in first-time buyer numbers over the last five years.

“Much of the growth in first-time buyer numbers has been recorded in regional housing markets where the cost of buying remains attractive.

“Our analysis shows that first-time buyers are seeking out the most affordable areas which deliver the best value for money in terms of accessibility and property type and size.

“In the highest-priced markets, first-time buyers are seeking two-bed homes but across large parts of the country first-time buyers are seeking out three-bed homes.”

The UK’s most popular locations for first-time buyers and average price of the property

Barking and Dagenham, London, £300,000, three-bedroom terraced

Tower Hamlets, London, £435,000, two-bedroom flat

Newham, London, £340,000, two-bedroom flat

Reading, south-east England, £240,000, two-bedroom flat

City of Wolverhampton District, West Midlands, £145,000, three-bedroom semi

Thurrock, east of England, £260,000, three-bedroom terraced

Greenwich, London, £340,000, two-bedroom flat

Luton, east of England, £215,000, three-bedroom semi

Southwark, London, £435,000, two-bedroom flat

Crawley, south-east England, £255,000, three-bedroom terraced

By Kalila Sangster

Source: Yahoo Finance UK

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Average first-time buyer deposit rises 7% in a year

First-time buyers faced having to raise around £3,000 more for a deposit in 2019 than a year earlier, according to analysis.

The average amount put down by a first-time buyer in 2019 was £46,187 – 7%, or £3,032, higher compared with the average £43,155 deposit the year before, Halifax found.

Across the UK, typical first-time buyer deposit sizes range from an eye-watering £109,885 in London to a substantial £24,091 in the North East of England.

The average price paid by a first-time buyer in the UK last year was £231,455, up by £18,252 (9%) from a year earlier (£213,203).

Burnley, in the North West of England, was identified as the most affordable area for local first-time buyers – calculated by comparing average earnings with average house prices – with a ratio of 3.1.

The least affordable was Hackney in London, with an average house price-to-earnings ratio of 12.1.

The average price paid for a home by a first-time buyer in London has increased by £27,764 or 7% in the past year alone.

The price of an average first-time buyer property in the capital has more than doubled over the past decade, from £222,107 to £453,385.

Despite increasing costs, the overall number of first-time buyers has remained stable, up around 1% from 353,130 in 2018 to 356,767 in 2019, Halifax said.

This means that such buyers account for more than half (51%) of all house purchase loans.

Northern Ireland saw the biggest percentage increase in the number of first-time buyers, up by 6% year on year, from 10,430 to 11,013.

Russell Galley, managing director, Halifax, said: “Whilst price growth in the overall housing market has been modest in recent years, the level of inflation facing first-time buyers is greater, which compounds the challenge in raising bigger deposits.

“However, given their importance to the market as a whole, it’s reassuring that the overall number of new buyers getting on the ladder remains stable.

“This is in part explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates.

“However, it’s clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built.”

Halifax used figures from its own database as well as data from UK Finance and the Office for National Statistics (ONS) to make the findings.

Here are figures from Halifax showing average first-time buyer house prices, deposits and deposits as a percentage of the house purchase price in 2019:

– North West, £136,104, £24,091, 18%
– Yorkshire and the Humber, £156,232, £27,598, 18%
– North West, £163,459, £29,472, 18%
– East Midlands, £181,876, £32,917, 18%
– West Midlands, £185,091, £34,178, 18%
– East Anglia, £220,719, £43,188, 20%
– Wales, £153,267, £25,704, 17%
– South West, £221,357, £42,584, 19%
– South East, £295,348, £54,425, 18%
– London, £453,385, £109,885, 24%
– Northern Ireland, £136,850, £25,317, 19%
– Scotland, £152,728, £29,950, 20%

By Vicky Shaw

Source: Yahoo Finance UK

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First-time buyer numbers in 2019 ‘at highest level since 2007’

The number of people taking their first step on the property ladder is estimated to have reached its highest levels since 2007 last year.

Across the UK, there were 353,436 first-time buyers in 2019, slightly up from the 353,130 recorded in 2018 and the highest annual total since 357,590 in 2007, according to calculations from Yorkshire Building Society.

But there is still some way to go before first-time buyer numbers reach 2006 levels, when the annual total stood at 400,870.

The society used industry-wide mortgage data from trade association UK Finance up to October 2019 and estimates for November and December 2019 to calculate the total number of first-time buyers last year.

Nearly twice as many first-time buyers secured a mortgage in 2019 as at the start of the financial crisis in 2008 (191,040), with those entering the property market now accounting for more than half (51%) of homes purchased with a mortgage. In 2008 this share was just 38%.

Yorkshire Building Society strategic economist Nitesh Patel said: “Even though the number of first-time buyers has stayed pretty much the same as last year, it is still encouraging to see first-time buyers top 350,000 for the second year in a row.

“They also represent over half of all homes bought with a mortgage, meaning the first-time buyer mortgage market share is at its highest since 1995, when they bought 53% of all mortgage-financed homes.”

He continued: “In recent years first-time buyers have been helped by strong competition driving mortgage rates down to near-record lows, making borrowing more accessible…

“Also government schemes such as stamp duty relief, Help to Buy equity loans and Help to Buy Isas will have made an impact.

“This combination of factors has made buying a home more accessible in recent years.

“This has seen the first-time buyer market bounce back from the financial crisis and perform better than other sectors, such as the home-moving and buy-to-let markets.

“However, as these figures show, the market may have now reached its peak and buying your first home still remains tough for many.”

Here are Yorkshire Building Society’s tips for first-time buyers:

  • Before you start looking at properties, review your personal finances.

If you are concerned about your current monthly outgoings, try to reduce these at least six months before making a mortgage application.

It is a good idea to check your credit report and make sure all the information shown is correct, before applying for a mortgage.

Make sure you appear on the electoral roll for your current address and check any records of loans and credit cards.

  • Once you are happy with your finances, try out a mortgage cost calculator, available on mortgage lender or independent money advice websites.

This is an easy way to help you work out what you can afford and how much you would be able to borrow.

Factor in any deposit saved (usually at least 5% to 10% of the purchase price as a minimum) as well as legal and survey costs.

  • Consider speaking to a mortgage adviser or broker.

A mortgage adviser will look at your income, any debts you have and your deposit to make an assessment on how much you can borrow.

They will also help explain how a mortgage works and the things you need to consider before buying your first home.

It is important to do this at the start of your house hunt, so your search is realistic.

Getting a mortgage offer in principle would show sellers that your finances are already in place, making you an attractive buyer.

  • When choosing where to live, make a list of what is important to you.

Consider the number of bedrooms, parking and outdoor space – and whether location is more important than the property.

It may be key to look at local amenities such as schools, shops and transport links too.

  • Remember that house purchases rarely stick to the expected timeframes.

This will probably be one of the biggest financial commitments you will make in your lifetime, so it needs careful consideration.

By Vicky Shaw

Source: Yahoo Finance UK

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Savills predicts drop in first-time buyers and boom in house prices for the north

House prices in the north-west of England will grow six times faster than in London over the next five years, Savills claims.

The agent has released its latest five-year price forecast for the housing market, with quite a few caveats.

The figures are based on an assumption that the General Election does not result in a significant shift in policy environment, that the UK ultimately achieves an orderly exit from the EU over the course of 2020, and avoids recession.

It also assumes that the bank base rate increases gradually to 2% by the end of 2024, constraining mortgage affordability and therefore house price growth.

With all that in mind, Savills predicts that first-time buyer numbers will slip back when Help to Buy is withdrawn. A new scheme is being launched in April 2021 with regional price caps that will run until April 2023.

Despite this, Savills forecasts that transactions will remain at around 1.2m, with cash buyers representing around a third of the market.

Overall, the agent expects UK house prices to rise by an average of 15.3% over the next five years to average £266,000 in 2024.

It is predicting a 0.5% increase this year, 1% in 2020, 4.5% in 2021 and 3% in 2022 , 2023 and 2024.

The north-west is forecast to see the strongest price growth at 24% between 2020 and 2024, attributed to “the strength and diversity of the regional economy and the capacity for higher loan to income borrowing”.

This will be followed by 21.6% growth in Yorkshire, 18% in Wales and 20% in Scotland, Savills said.

In contrast, average house prices are expected to increase by just 11% across the south and east of England and 4% across Greater London.

Savills said this was because these regions have already previously outperformed the rest of the UK.

Lucian Cook, head of residential research for Savills, said: “We anticipate a continuation of trends seen historically, where London and the south-east underperform markets in the midlands and north.

“This stage of the cycle appears to have begun in 2016, coinciding with the referendum, when London hit up against the limits of affordability.

“Markets further from the capital, such as Leeds, Liverpool and Sheffield, were much slower to recover post financial crisis and have much greater capacity for house price growth relative to incomes, even as interest rates rise.”

The agent also predicts that prime central London will, however, rebound and rise 3% next year, the first annual price growth since 2014, and increase 20.5% over the next five years.

Cook added: “PCL has become increasingly dislocated from the Greater London mainstream over the past five years; we expect that to go into reverse.

“Historically, a recovery in the prime markets has been sparked in prime central London, when the city’s most expensive properties start to look good value on a world stage.

“Values have been bottoming out over the past year, resulting in a build-up of new buyer registrations over recent months. Both signal that the market is set for a bounce, but this is being held up by uncertainty.”

5-year mainstream house price forecasts2019 av house price  £2019 est20202021202220232024Total5 year growth  2024 av house price £
UK231,0000.5%1.0%4.5%3.0%3.0%3.0%15.3%266,000
North West169,0004.0%2.5%6.5%4.5%4.5%4.0%24.0%210,000
Yorkshire & The Humber165,0001.5%2.0%6.0%4.0%4.0%4.0%21.6%200,000
Scotland151,0001.5%2.0%6.0%3.5%3.5%3.5%19.9%180,000
North East131,0001.5%1.5%5.0%4.0%4.0%4.0%19.9%157,000
West Midlands205,0003.0%3.0%5.0%3.0%3.0%3.0%18.2%242,000
East Midlands194,0001.0%3.0%5.0%3.0%3.0%3.0%18.2%229,000
Wales165,0001.5%2.0%6.0%3.0%3.0%3.0%18.1%195,000
South West256,000-0.5%0.5%4.0%3.0%2.5%2.5%13.1%289,000
South East321,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%357,000
East291,0000.0%0.0%3.0%2.5%2.5%2.5%10.9%323,000
London462,000-2.5%-2.0%1.5%1.0%1.0%2.5%4.0%480,000

By MARC SHOFFMAN

Source: Property Industry Eye

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Moving costs reach record highs, led by rise in stamp duty

The average cost of buying and selling home in the UK has reached a record high at £10,414 or £24,585 in London, new research has found, a rise of 2% year on year.

It is higher stamp duty payments, up 4%, and larger conveyancing fees, up 5%, that are driving the cost of moving home, according to the annual study from ReallyMoving.

The research also shows that the costs for first time buyers have also risen, up by 2% year on year to £1,613.

Stamp duty now makes up some 44% of the total cost of a home move, rising to 65% in London. Those buying and selling, now pay on average £4,625 in stamp duty, based on the median property value, while conveyancing costs stand at £1,490.

Although varying significantly depending on the distance of the move and the volume of possessions transported, removals charges have also increased by 1% over the last year to £480 on average.

The cost of an Energy Performance Certificate (EPC) remains unchanged at £55, but other expenses have dipped slightly over the last year, such as a Homebuyers Report which now costs £408, a fall of 4%, and estate agent fees at £3,356 are down 1% as suppliers compete for business in a contracted market that has seen transaction levels fall 12.4% year on year.

Movers in London face the greatest cost of moving, with the upfront costs associated with buying and selling a home in the capital now at £24,585, almost 2.5 times the UK average.

With property prices in London following a downward trajectory in 2019, home owners are finding it harder to fund a move through growth in equity, therefore the high cost of moving is becoming increasingly prohibitive, the report says.

The South East, East and South West are among the most expensive regions for movers, with the East and West Midlands sitting in the centre of the table and Northern Ireland and the North East the least expensive locations as a result of lower house prices, enabling greater fluidity in the housing market.

Moving costs for first time buyers across the UK are considerably lower at an average of £1,613, due to the exemption of stamp duty for first time buyers on properties up the value of £300,000.

A 2% annual increase in overall costs has been driven mainly by marginal rises in removals and conveyancing fees. Yet higher house prices in London mean that first time buyers in the capital are typically paying £3,750 in stamp duty, bringing their overall costs to £5,684, some 3.5 times the UK average.

‘Home owners are having to dig deeper than ever before to fund a home move, with upfront costs reaching another record high in 2019,’ said Rob Houghton, chief executive officer of ReallyMoving.

‘Stamp duty charges may be fixed, but it is possible to make savings on other costs such as conveyancing, surveys and removals by shopping around online for the best deals and comparing ratings and reviews, as well as price,’ he added.

Source: Property Wire

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Mortgage boom helps drive northern powerhouse

The mortgage market is booming in the North of England with the number of first-time buyers soaring to a pre-financial crisis high.

Figures released today by UK Finance revealed, in 2018, the mortgage industry helped nearly 85,000 households buy their first home in the region – which is made up of the North West, North East and Yorkshire and Humber.

This is an increase of 3% on the previous year and is the highest level since 2006, according to UK Finance which is publishing the data to coincide with its ‘Northern Powerhouse’ dinner to discuss how financial services can support the region’s economy.

These strong figures, it suggested, were down better affordability in regions of the North, where the average deposits and income multiples were lower than anywhere else in England. It said there was an increase of 1.1% in the number of home movers.

Buy-to-let hotspots

It wasn’t just residential mortgages which were helping to drive the boom. Newcastle, Liverpool and Hull bucked the national trend and experienced strong growth in buy-to-let lending, UK Finance revealed.

It said this had been driven by lower house prices and a healthy labour market as well as strong rental demand. This allowed landlords to achieve higher yields than the UK average.

The growth in Hull was particularly strong – with buy-to-let lending soaring by 12.8%.

Jackie Bennett, director of mortgages at UK Finance, said: “These figures show the North of England has a strong and dynamic mortgage market, with lenders helping thousands of first-time buyers onto the housing ladder.

“This has been combined with a steady increase in home movers, making it easier for buyers to find a property that suits their needs.

She added: “The mortgage industry stands ready to work with the UK government and local authorities to capitalise on these strengths and help deliver on the full economic potential of the Northern Powerhouse.”

Strong regional disparities

While the figures were good news for the North of England, they also exposed weaknesses in other parts of the UK, particularly in London.

Shaun Church, director of Private Finance, said they highlighted the strong regional disparities in both housing demand and activity.

“Comparatively low property prices and strong rental demand makes the North an attractive prospect for landlords,” he said.

“After years of being slammed by regulatory changes making it harder to turn a profit, investment location has never been more important. Northern regions are still enjoying decent house price growth, meaning landlords can also enjoy an increase in the value of their asset.”

By Kate Saines

Source: Mortgage Finance Gazette