Questions over new builds
There is little doubt that the introduction of the Help To Buy equity loan scheme by the Government back in 2013, considerably boosted the new-build sector for residential property in the UK. In 2016, the highest number of new homes were built since 2007. However, there have been some concerns regarding the loan to valuations attributed to some of these transactions in the past.
Adrian MacDiarmid, the Head of Mortgage Lending Relations at Barratt Developments, was reported to have said: “Homebuilders need to redouble their efforts to ensure the transparency of transactions is beyond doubt. Equally we would like to see lenders consider whether their maximum LTVs are a fair reflection of the risk of lending to a customer in a post Mortgage Market Review world. . . “
Collapse in Buy-to-let lending
Interest in the buy-to-let sector has collapsed by almost 80% as the double-whammy of the increased tax burden and the hike in stamp duty for such purchases that took effect last April, have come home to bite. Only 71,100 buy-to-let loans were taken out this March compared to 142,100 loans taken out in the same month last year, as there was a rush to beat the tax changes.
The Council of Mortgage Lenders (CML) reported that £900 million was lent to BTL investors in March, which represents a 79.5% reduction from the previous year, when £4.4bn of landlord loans were approved.
CML reports strong growth in first-time-buyers
The latest figures from the CML reveals that there has been strong first-time buyer activity in the residential property market in March, as 31,500 loans were approved, which is a 30% increase from the previous month and 12% higher year-on- year. Therefore, in the first quarter of 2017, with 78,300 loans approved for first-time-buyers, this is an increase of 10% year- on-year, albeit down 13% quarter-on-quarter.
The Director General of the CML, Paul Smee, commenting on this data said: “Overall, lending trends have remained reasonably consistent. The relatively sluggish activity among homemovers stands in contrast to the growth in first-time buyer and remortgage activity, but in aggregate the market is showing broadly the levels of activity we expected.“
Housing stock “less than half pre-crisis norms”
The Bank of England Agents’ summary of business conditions, based on data from regional agents, indicates that the housing market has seen little change in Q1 2017, reflecting other reports of slow rising demand and low supply.
Some agents have noted that the number of properties for sale on their books was “less than half pre-crisis norms” with “modest excess demand” supporting “low-level house price inflation”. There are clear regional variations, with properties in London taking longer to sell.