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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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First-time buyer numbers up in October but re-mortgage activity falls sharply

The number of people getting on the property ladder was higher in October than a year earlier, but re-mortgaging levels fell sharply, figures from a trade association show.

Some 32,260 new first-time buyer mortgages completed in October 2019, 2.8% more than in the same month in 2018, UK Finance said.

There were also signs of increased activity among existing home owners who were moving properties.

There were 33,370 home-mover mortgages completed in October 2019, 4.2% more than in October 2018.

Meanwhile, there were 18,910 new re-mortgages where extra money was borrowed – down by around a fifth (20.8%) on a year earlier.

For these re-mortgages, the average additional amount borrowed in October was £51,000.

There were 20,660 new “pound-for-pound” re-mortgages with no additional borrowing – 20% fewer than in October 2018.

UK Finance said the fall in re-mortgage activity follows a strong period of growth in September.

Looking at lending to landlords, UK Finance said 6,600 new buy-to-let home purchase mortgages were completed in October 2019, 1.5% fewer than a year earlier.

There were 16,200 remortgages in the buy-to-let sector, 2.4% down on the same month in 2018.

The figures were released as a separate report from NAEA Propertymark (National Association of Estate Agents), which said the number of house hunters registered per estate agent branch decreased in November, from 341 to 332. This was the lowest figure seen since July.

The number of properties available per member branch remained the same in November, standing at 39.

Mark Hayward, chief executive, NAEA Propertymark, said greater political certainty, following last week’s general election, could now trigger more housing market activity.

He said: “The housing market now has reassurance from a Government, which will in turn inject some confidence in the market for both buyers and sellers.

“Now the political impasse is resolved and it’s clear how and when we’ll be leaving the EU, we hope there will be a degree of certainty which may trigger a flurry of activity.”

By Vicky Shaw

Source: Yahoo Finance UK

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Rental affordability ‘improving as more people make jump on to property ladder’

The cost of renting has become more affordable as a jump in people getting on the property ladder has helped to take some of the pressure off demand in the sector, an index suggests.

Zoopla, which has launched a new quarterly rental report, said average private rents are up 2% annually to £876 per month on average across the UK.

It said a typical single earner can now expect to spend 31.8% of their wages on rent, down from a 2016 peak of 33.3%.

The figures are based on gross earnings and someone renting a whole property – so someone sharing with others could potentially cut their costs.

Separate mortgage lending figures released by UK Finance this week showed there were more first-time buyers in August than in any other month since 2007.

Housing market experts have suggested that stamp duty relief for first-time buyers, low mortgage rates, and a sense of urgency fuelled by Brexit are among the factors driving people to make the move into home-ownership.

Zoopla said the affordability of renting has improved as wage growth has been increasing faster than rental prices.

Richard Donnell, director of research at Zoopla, said: “Renting is more affordable today than the 10-year average.

“This follows weak rental growth over the last three years, and an acceleration in the growth of average earnings.

“First-time buyers, 80% of whom exit the private renting sector to buy, has also moderated rental demand.

“Rental affordability varies widely across the country, reflecting the relative strength of local economies.

“High house prices increase the underlying demand for rented homes.

“Meanwhile, in markets where buying is more affordable, rental demand is limited, resulting in lower rental values.”

Across the UK, homes take 17 days to rent on average – down from 19 days a year ago.

But in some cities, the average home rents out much faster than this – including Brighton (13 days), Nottingham (12 days), Edinburgh (11.3 days), York (10 days), and Bristol (9 days).

Here are average monthly rental prices followed by the year-on-year increase and the affordability for a single earner, showing how much of their money would typically go on rent, according to Zoopla:

– England, £900, 2.0%, 32.1%
– Scotland, £625, 2.9%, 24.2%
– Wales, £592, 1.9%, 24.5%
– Northern Ireland, £587, 1.8%, 24.9%

English regions;
– East Midlands, £638, 3.2%, 25.8%
– Yorkshire and the Humber, £578, 2.8%, 23.3%
– South West, £787, 2.6%, 30.8%
– London, £1,622, 2.3%, 45.9%
– North West, £599, 1.8%, 24.2%
– Eastern, £876, 1.6%, 30.2%
– South East, £1,007, 1.4%, 32.9%
– West Midlands, £660, 0.8%, 26.6%
– North East, £503, 0.5%, 22.3%

By Vicky Shaw

Source: Yahoo Finance UK

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Study reveals rental costs before buying a first home

The average adult in Britain will pay out more than £63,000 in rent before they get onto the property ladder, a new study has found.

Researchers found that people who have bought their first home within the last five years had typically paid £625 every month in rent to their landlords.

And on average, it takes renters almost eight and a half years before they finally save up enough to buy their own home, spending a total of £63,225 in rent, according to the study from home builder Keepmoat Homes.

This means they’ll have already spent the equivalent of more than a quarter of the average £228,903 property in the UK, it points out.

‘For many people, renting is an important first step towards home independence. It offers benefits like flexibility, allowing you to test different areas and types of home, before you commit to buying somewhere,’ said Tim Beale, the firm’s chief executive officer.

‘However, this research highlights the considerable cost of renting and therefore it isn’t surprising to see that for over half of people asked, say they feel as if the dream of home ownership will never be possible,’ he explained.

‘In reality home ownership can cost less than your rent. For example with our average selling price of £156,000, the standard monthly mortgage repayments would make you approximately £100 a month better off than paying the typical £625 rent,’ he added.

The study also found that of those who had bought their first home in the last five years, or who are still renting, some three quarters believe it is ‘impossible’ to save for a home while renting.

Of those who have bought a home, they spent almost five years saving before putting down an average deposit of £24,033 on their property, more than 80% of the average adult’s salary.

However, four in 10 were able to lean on their parents for financial support when it came to their deposit, while a fifth relied on an inheritance and a quarter even ended up moving back in with their parents to save on rent while 24% considered it but were able to avoid it.

For those respondents still renting, they think it will be at least another four years before they are in a position to think about buying their own home. Researchers also found 18% of renters have taken on two jobs in a bid to save for a deposit while paying out monthly to a landlord.

One in four have forsaken holidays, and a third have cut back on luxuries like magazines, flowers in the home and TV and movie costs while 30% said that they started taking a packed lunch to work and 18% tried to do all of their shopping in the reduced section of the supermarket rather than paying full price.

Unsurprisingly, three quarters of those polled, via OnePoll, believe something needs to be done when it comes to the cost of renting to help those trying to save for their own home.

Source: Property Industry Eye

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New scheme offers mortgage-free home ownership to first-time buyers

There’s a new way for first-time buyers to get on the property ladder – and it doesn’t involve getting a mortgage.

Launched to the public in July, Unmortgage offers people the chance to buy a share of between 5% and 20% in a property, which they can then live in.

Rent, set at local market rates, is paid on the remaining share, which is owned by an investor.

Homeowners have the option of building up their share over time, or can completely buy out the investor, reports the Manchester Evening News.

To qualify, you must have a minimum gross household income of £30,000 (or a maximum of £100,000), and the rent can only cost up to 36% of your income.

The idea is that buyers can become partial homeowners, without needing to worry about the salary-based lending caps normally applied by mortgage lenders.

According to the website, ‘Unmortgage is for you if you can’t afford to buy the home that you can afford to rent.’
Unlike shared ownership, it’s not just available on new builds, giving you more choice in the kind of property you buy . Once you’re in, you’ll be able to increase your share as often as you want.

The scheme also eventually allows you to buy 100 per cent of the property, as opposed to the 40 per cent cap in shared ownership schemes.

Here’s everything you need to know about the Unmortgage scheme:

How does Unmortgage work?    

If you’re a first-time buyer, you’ll need to pay at least 5 per cent of the deposit for your new home. Unmortgage requires new customers to pay at least £12,500 as a minimum to use the service.  

Once you’re up and running, you can buy up to 5 per cent more of your home each year, up until a maximum of 40 per cent. After reaching 40 per cent, Unmortgage expects buyers to either buy the rest of the property with cash or with a mortgage.

You’ll only be able to buy the property in full if its value has not fallen below purchase price.

Who can apply for Unmortgage? 

To apply you’ll need an income of between £30,000 and £100,000 before tax, whether you’re renting alone or with somebody else.

To use the service you’ll need an acceptable credit rating, and if you have struggled to meet rent payments and/or been made redundant in the past, chances are your application will be rejected.

What homes can you buy on Unmortgage?

Unmortgage has laid out a specific set of guidelines for the types of homes its investors are willing to to fund.

These include:

  • Homes in quiet, urban areas
  • Homes with no foundation problems
  • Homes which are ready to move in to
  • Homes with between two and five spacious bedrooms
  • Homes which are freehold, share-of-freehold or leasehold with a lease of at least 100 years.

As investors want to place their money into properties which will increase in value over time, Unmortgage will not help with the purchase of new-builds, properties on main roads, motorways or rail tracks, houses with ‘unfairly sized bedrooms’ or former social housing.

How is rent calculated?

To calculate the rent you pay on your home, Unmortgage will consider the rental value of similar homes in the area and then deduct your deposit from that amount.

Rent can rise each year in line with the RPI (retail prices index) measure of inflation. However, your rent price will not drop if inflation falls.

How is Unmortgage different from renting?

Although you don’t immediately own your new home, you won’t be restricted in what you can do with it. Even though you’re renting the part you don’t own yet, you’ll be able to have pets, nail up pictures and paint the walls. The only thing you won’t be able to do is major renovations, as these don’t always go to plan and could affect the price of your house before it has been fully paid off.

Should you use Unmortgage if you can get a mortgage for a home you love?

Unmortgage has been set up for first-time buyers who can’t get a mortgage for a home they could easily afford to rent. But if you can get a mortgage for a home you love, it’s advised that you speak to an independent advisor for a professional opinion on the best course of action to take.

Do you have to pay stamp duty?

In short, yes. Unfortunately, using Unmortgage will not make you exempt from paying stamp duty, and you may find yourself paying it at  an enhanced rate. The initial stamp duty costs will be split between yourself and the investment partner.

Unfortunately using the scheme will make you exempt from first-time buyer stamp duty discount, so this is something to consider.

Because you’re buying as part of a partnership with a business, both you and the investor will be charged with an additional 3 per cent stamp duty fee on top of the usual rates.

And, if you go from 40% to 100% ownership you’ll be liable to pay stamp duty again on the full property value – but this time without the 3 per cent surcharge.

What fees will you need to pay?

While Unmortgage claims to charge no fees, you will still be liable to pay for solicitor and surveyor fees, as well as any leasehold fees. These costs will be split proportionately with the investment partner.

A RICs surveyor will value the home every year, and online valuations will be provided each month.

Can you move out of your property before you’ve bought it in full?

If you decide you want to move out of your Unmortgage property before you have repaid the investors in full, you can do.

While you’re able to stay in your home as long as you keep up with rent payments, if you decide you want to go elsewhere, the funding partner will be given three months to decide whether they want to buy your stake or sell with you.

If you wish to move on you will be liable to pay certain fees, such as a £350 fee towards valuation costs of the property. You will then be eligible to split any remaining selling costs with the investor – a calculation which is based on your stake in the property.

By Rachel Pugh & Amardeep Bassey

Source: Kent Live

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Older People in ‘Under-Occupied’ Homes are Blocking Property Ladder for Younger Generations

Older people are staying in their homes longer and locking younger buyers out of family properties or homeownership all together.

Economic uncertainty has depressed buying and selling activity among existing homeowners, Nationwide Building Society said, and potential first time buyers are feeling the consequences.

The mortgage lender said homeowners aged 55 to 64 have been in their current properties on average for 17 years—10 longer than homeowners between 35 and 44.

Older owners have remained in their homes even as their children have moved out, resisting “downsizing” amid economic uncertainty. Consequently, a growing portion of homes now have two or more spare bedrooms.

Nationwide said that 54% of homes occupied by their owner are now under-occupied, up from 42% in 2000.

Among owners over 65s, two-thirds of homes have at least two spare bedrooms.

“A possible consequence of the low rate of churn is that the housing stock is not being utilised as effectively as it could,” Nationwide chief economist Robert Gardner said.

Younger buyers are unable to find suitable properties. And increasingly, those first-time buyers are looking for houses, “leapfrogging” smaller starter flats.

Recent figures from the Land Registry show that the prices of flats and maisonettes have fallen, while those of houses, especially detached properties, have risen.

First-time buyers’ preference for houses is perhaps a reflection of the huge cost of home ownership and their older age when buying. The average first-time buyer is now 33.

Furthermore, much like older generations, these young buyers are looking for a property to remain in for years, Richard Donnell, insight director at Zoopla, said.

That’s if they can get on the housing market at all. A report from Santander last week cautioned that the housing market is failing younger generations, just a quarter of whom can expect to own their own homes by 2026.

Among other reforms to the market, the lender suggested the government cut stamp duty to encourage older homeowners to sell their larger properties and downsize, leading to better use of housing stock.

Low rates of turnover have also curbed housing price growth. Nationwide’s figures showed that UK house prices rose on average just 0.3% in July, compared to the same month last year. That marks the eighth consecutive month that house price growth has been under 1%.

Source: Money Expert

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First-time buyers need to earn £54,400 to get on the property ladder

The average first-time buyer needs a household income of £54,400 to get on the property ladder in British cities, new figures suggest.

First-time buyers need to earn more now than three years ago in most UK cities, with the exception of the most expensive areas—where buying is now marginally more affordable.

The average house price in 20 UK cities is now £256,200, up 1.8% on a year ago, according to a monthly review of the UK property market by Hometrack.

Fast-rising property prices in Manchester and Leicester mean first-time buyers now need to earn around 20% more than three years ago.

The highest increases in house prices have been in some of the most affordable cities, with prices up 5% in Liverpool and 4.6% in Belfast.

Buyers can secure their first home of their own on a total household income of £26,000 in Liverpool and Glasgow, whereas Londoners need £84,000 a year.

But the expensive cities where buyers need the highest income have seen the property market become slightly more affordable in recent years.

London, Oxford and Cambridge have seen the average income to buy fall 5% since 2016.

The latest Hometrack report says house prices in UK cities have grown around 7% a year for the past 23 years, far outstripping growth incomes.

Separate figures released today by Lloyds Bank also show the number of homes worth £1m or more has reached a record high.

More than 14,600 homes worth at least £1m were sold in 2018, up 1% on the previous year despite a slowdown in the property market particularly in London and the south-east.

By Tom Belger

Source: Yahoo Finance UK

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Number of first-time buyers in the UK reaches an all-time high

The number of first-time buyers wanting to get their foot on the property ladder has reached a 12-year high in the latest report from UK Finance.

In the new study, they have revealed that during 2018 the number of first-time buyers applying for mortgages reached 370,000 — 1.9 per cent more than the previous year. This is the highest number of first-time buyers since 2006, when 402,800 mortgages were completed.

It also reveals that £62 billion of new lending in 2018 was up by 4.9 per cent in comparison to 2017.

With government incentives such as Help to Buy lending a hand to the new generation of homeowners, more buyers were able to purchase their first home without the hefty deposit.

Elsewhere, the study also reveals that there were 5,100 new buy-to-let home purchase mortgages completed in December, which has fallen by 5.6 per cent on the same month of the previous year.

‘The mortgage industry helped 370,000 people buy their first home in 2018, the highest number in 12 years, as competitive deals and Government schemes such as Help to Buy continue to boost the market,’ explains Jackie Bennett, the Director of Mortgages at UK Finance to Landlord News.

‘Homeowner remortgaging also saw strong growth, driven by customers locking into attractive rates, a trend we expect to continue in 2019, as more fixed rate mortgages come to an end.

‘Demand for new buy-to-let purchases continues to be dampened by recent tax and regulatory changes. However, the number of buy-to-let remortgages reached a record high of almost 170,000 last year, suggesting many landlords remain committed to the market.’

Planning to buy your first home this year? With house prices rising just £714 in a year, now could be the time.

Source: House Beautiful

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More First-Time Buyers Enter Property Market in November

UK Finance figures show that more first-time buyers got their foot on the property ladder in November, before the Christmas slowdown.

Its Mortgage Trends Update for November 2018 indicated that 36,200 new mortgages for first-time buyers were completed that month. This is a 5.8% increase over November 2017. At £6.0bn, the new lending was up by 9.1%  year-on-year. The figures revealed that the average first-time homebuyer is 30 years old and has a £42,000 gross household income.

Land Registry figures show that in England, the average first-time buyer purchases their first property for £207,538. This is 2.3% higher than last year, but property prices are the same from the month before.

In London, however, first-time buyers in 2019 will pay £413,744 on average to get on the property ladder. This is a drop of 0.9% from a year ago and an increase of 1.1% from October 2018.

In November, 36,200 new homeowner mortgages were completed, which 1.1% higher than in October. New lending totalled £7.8bn, which is 4% higher year on year. In London, the average first-time buyers in 2019 are 39 and have a £55,000 gross annual income.

The total number of new buy-to-let purchase mortgages in November was 6,100, which is 9% fewer than in November 2017. Value-wise, this was £0.8bn of lending, down 111% from the year before.

UK Finance Director of Mortgages Jackie Bennett said that a combination of competitive schemes and dealers helped a growing number of first-time buyers purchase a home during November.

In the meantime, there has been a steadying in homeowner remortgaging, after reaching its highest point in a decade as many fixed-rate deals concluded. In the buy-to-let market, purchases continue to be slow while remortgaging is on the rise due to attractive rates.

Source: CRL

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Young couples losing out on family life as house prices soar

Millennial couples are delaying having children and “putting their lives on hold” because of the sky-high cost of housing, “shocking” figures show.

Young couples are two times more likely than 35-54-year-olds to delay having children in a bid to get onto the property ladder, according to numbers crunched by mortgage broker Trussle.

The analysis also revealed that since 1978, the average house price has risen by 1382% from £14,236 to £211,000, meanwhile the average annual UK salary has risen from £3,269 to just £26,500 – pricing many families out of the housing market.

Ishaan Malhi, founder and chief executive of Trussle, said that young people are “being forced to put their lives on hold in a bid to join the property ladder”, while Labour’s shadow secretary for housing John Healey described the situation as “shocking”.

As part of the study, more than 2,000, participants were asked what sacrifices they had made in order to buy their first home.

A total of 15% of buyers aged 18-34 years old admitted to delaying having children, compared to 7% of 35 to 54-year-olds and 5% of over 55s.

Mr Healey added: “It’s shocking that the number of under-45 home-owners has fallen by a million since 2010, with young people on ordinary incomes increasingly having to make big sacrifices to buy that special first home.”

The new findings support previous research into the relationship between family planning and the decline of affordable housing.

In 2016, a Shelter and YouGov study revealed that due to the housing crisis, 22% of couples were either already delaying parenthood or planning to in the future.

Hannah Slater, policy manager at Generation Rent, said: “With renting the norm for millennials, starting a family is becoming a much harder choice.

“Housing costs are driving rising child poverty rates, so many families are forced to make a choice between delaying or not having children, or having children but living in poverty in insecure homes.”

The survey also highlighted that 15% of millennials delayed getting married, compared to 5% of “Generation X”, meanwhile 13% put off entering into a romantic relationship in comparison to 5% of 35 to 54-year-olds.

According to Dr Kim McKee, co-author of the report titled The Frustrated Housing aspirations of Generation Rent, such housing pressures are felt by millennial women in particular.

She said: “For young women, the decision to start their own family forces them to reflect on their own living situation.

“They worry about being able to give their child a safe and secure home; somewhere they could settle and put down roots.”

Source: Express and Star