This Week in Property: The Latest News (23rd April 2021)

Take a look at what our CEO Gill Fielding has to say about this week’s property news…

It’s a big week for mortgages

This is the week that some providers are launching their 5% deposit, government backed mortgages but not all providers are rushing into the market place and often the rates are quite high. The scheme is for properties valued at up to £600k and generally the government guarantees 15% of the mortgage.

Lloyds, Santander, Barclays, HSBC and NatWest are starting to offer products this week and Virgin Money will do so next month. However, some lenders such as Halifax and Barclays have said that these products will not be available for new-build properties. Interest rates are higher and NatWest’s new 95% mortgages will start at 3.9%.whcih compares to approximately 3.1% on other products which have a 10% deposit, so although this scheme may help some potential property owners get started, it will be more expensive and lead to higher monthly payments.

So some more mortgages at the lower end of the market PLUS there is news of more products at the top end too. Banks are planning to increase the supply of high loan-to-value mortgages as house price growth and a strong economic recovery boost their appetite for risk.

According to the latest Bank of England credit conditions survey, lenders expect demand for mortgages to reach the highest level on record in the next three months and this is because of confidence in the economy recovery post Covid. The availability of borrowing is always a good sign for the economy: the more mortgages there are the more choice people have and the better deal they can get. It also shows the strength in the housing market and the fact that the finance providers believe that property prices are going to stay high or climb further.

All good news for financial life after the pandemic!

Planning numbers don’t add up!

The government and the public – and me – are always moaning about the lack of housing supply in the UK and every year the government claim that they want to build about 300,000 new homes in order to release the demand pressure but this never happens.

Consequently the government are gradually reducing planning rules so that many more homes can be built without constant red tape and the permitted development regulations that are now law allow much development without planning permission at all. So why does housing supply continue to fall short of demand?

There are many reasons and this is a complex issue but the builders are partly to blame. Of the 350,000 permissions granted per year, only about 200,000 houses get built as major building companies hold onto land. Despite the fact that approximately 90% of planning permissions get approved the big six building firms are holding onto about a million plots of land. This is partly to generate profit because as soon as a plot has planning permission it’s value goes up and sometimes building the property doesn’t generate an equivalent amount of profit and just sitting on the plot can sometimes be a better business option.

This has to change if we are to solve our property crisis and one suggestion is that building firms have only a limited time to build before they have to resell the plot or do something with it. This is part of a proposed housing delivery test for major builders. The building firms say there already is a housing delivery test but much of their issue is to do with governmental constraints over the green belt for instance and that they spend countless amounts of time debating with local authorities before a property can be built.

There are clearly two sides to this debate but there has to be something done to get all sides agreeing to a workable policy for all – otherwise the housing numbers just don’t add up.

Property Investors Rising!

Despite much negative publicity about the plight of the professional property investor it seems they don’t believe the hype because they’re investing more than ever! Data from Hamptons, the estate agents, suggests that investors bought twice as many properties in the first quarter of 2021 than they did in 2020 and they state that investor purchases increased 111% year on year with investors buying 13% of all property in the months January to March 2021.

That’s amazing but not surprising. Property investing is a great profession if done right and most of the so called disadvantages aren’t really problematic for a well educated and informed investor. And that’s the issue. The media scare the casual or amateur investor but a professional knows how to get the right information and support to be able to carry on their business, just like the owner of any other type of business. And clearly they are taking action!

House prices just keep on going

Data from HM Revenue and Customs (HMRC) shows that UK property transactions in March hit the highest monthly level since modern records began in 2005.

There were 180,690 UK property sales in March more than double the number in March last year and 50% higher than February. Official data also shows average UK house prices rose 8.6% in a year.

These are amazing statistics bearing in mind we’re living through a pandemic and have been for the entire time of these figures but just proves the resilience of the property market.

We have about 1,000 years of data regarding the housing market and the figures show that long term property prices always rise – and they rise above inflation which allows a property to become an asset either for your retirement of for investment. It’s nice to know that in this confusing, uncertain world that some things never change!

What’s the hold up?

If you’ve ever bought a property you will know the frustration of the process. It seems to be full of delays, missed messages and confusion although the actual transaction is fairly simple and certainly very standardised.

Apparently the average time to transact a property in the UK is about 20 weeks – that’s FIVE months – but we know that the whole thing could be done in a day or two. The whole system of conveyancing is outdated and in the main a manual process completed by a solicitor wading through copious amounts of paperwork.

It’s time the whole process was reviewed and updated and I’ve recently read about an online case management system  which can be seen by all parties and which generates letters, stores paperwork and allows project management. The system is called In Touch and the creators believe it will cut transactions times by a few weeks. That’s a great start and it is already used by about 6,000 people in the UK.

It would be great to see more innovations of this kind and then we can all stop puling our hair out over administrative and logistical inefficiencies every time we buy or sell a property.


If you would like to find out more about investing in property, come along to our 3-Day Property Investing Training.

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