Property News All The Latest Updates
Hi guys welcome to our fortnightly property blog, today we once again look at the latest goings-on in the UK property market from looking at the ‘Bank of mum and dad’ to examining the tough buy-to-let rules that could backfire for first-time buyers and movers. If you missed our last property news round-up, catch up here.
‘Bank of Mum and Dad’ Lends £5bn a Year in UK
Lending from parents to help their children get on the UK property ladder will amount to £5bn in 2016, according to data from Legal & General (L&G). (BBC News, May, 2016)
The ‘Bank of mum and dad’ will help to finance 25% of all UK mortgage transactions this year – at an average amount of £17,500 as the BBC’s Bill Wilson mentions.
L&G’s chief executive Nigel Wilson told the BBC : “The Bank of Mum and Dad plays a vital role in helping young people to take their early steps on to the housing ladder.”
He stressed a whole range of issues, including house prices which are out of sync with what Generation Y are currently earning.
Millennials that are accepting property funds from their parents are receiving substantial amounts.
Dan Howdle (a millennial featured in the BBC article) bought a three-bedroom semi-detached property in Rugeley, in the West Midlands, thanks to his parents giving him £50,000.
Mr. Howdle said that if it wasn’t for his parents, he would have expected to be a renter for the rest of his life.
Research conducted from L&G and economics consultancy Cebr suggests the ‘Bank of Mum and Dad’ will provide deposits for more than 300,000 mortgages, purchasing homes worth £77bn this year.
If you would like to know more about millennials check out our research that we conducted back in October last year, view here.
Is This Greater Manchester’s Most Expensive Garage?
The region is no stranger to luxury homes and high property prices, but you wouldn’t normally associate a garage with luxury.
However, a property in Salford Quays which is very close to MediaCityUK is featured on property portal site Rightmove.
The advert mentions that the Salford Quays garage is : “Ideal for those requiring additional garages for storage or the housing of a vehicle etc.” (MEN, May 2016)
Although the 16’2 x 7’9 unit has enough space to suit every need, as mentioned in MEN, at almost £156 per sq ft, the space is coming at a premium.
The irony is that once you’ve saved your hard earned cash you might not be able to afford to put anything in it!
If you’re looking at getting involved in property crowdfunding (no expensive garages included!) why not take a look at our latest investments here.
Image source : MEN
Surprising Things That Affect The Value Of A Property
There are many factors that come into play when it comes to property values, some much more obvious than others. From the quality of your local to the sea of toys on a kid’s bedroom floor, issues that may seem insignificant can have a shocking impact on the value of a property.
As previously mentioned, A messy kid’s bedroom is one factor that might shock you. According to ING Direct, a messy kid’s bedroom can knock £8,000 off the value of the average house.
Street names also comes into play, kings are 20 per cent costlier than queens. Rude names also sell for less – fancy living in Bell End? Thought not!
So what also affects property values? Some other factors include numbers, if you own a number 13 home, it’s likely the property will sell for £6,500 less than its neighbours according to a Zoopla study. Another surprising factor is the local pub. If the local is known for having rowdy regulars it can really put potential buyers off and have a negative impact on the property price. In contrast, a lovely local pub that serves craft ale and has a delectable line in homemade pies is a major plus for property buyers and prices.
New-build Homes Aren’t The Answer To Rising House Prices, According to Academic
New-build homes make property even more unaffordable, according to research from a leading academic.
The finding of Dr Alla Koblyakova, of the real estate economics and investment research group at Nottingham Trent University, dispels the assumption that the supply of new-build properties alone helps to stem unsustainable growth in house prices. (This is Money, April 2016)
Dr Koblyakova mentions in This is Money that The Government thinks that by increasing the supply of new homes, the overall cost of owning a property will come down.
However, research indicates that the mortgage market behaves differently. For example, when new housing comes on to the market, lenders relax their conditions and lend more money. When consumers are more able to buy a property for a higher price, the price of property doesn’t come down.
Dr Koblyakova stressed the biggest issue was that property values in the UK go up faster than wages.
In addition, she states : “It’s not possible for the Government to control house prices. But it is possible for politicians to motivate lenders to offer longer mortgage contracts to reduce the size of monthly mortgage payments.”
Her recommendation is to increase the duration of a mortgage to 30 years, in order to make it possible those on average incomes.
Alistair Hargreaves from mortgage broker John Charcol shares the same view with Dr Koblyakova on the housing issue. He mentions in the This is Money article that in Britain there is a perception that we are full. In reality, there’s loads of space, Britain is just badly designed. What is lacking is infrastructure as well as the fact there aren’t enough, or good enough, jobs and schools nearby to make people want to relocate.
You can read more about Dr Koblyakova’s and Alistair Hargreaves’ views here.
Tougher Buy-To-Let Rules Could Backfire According To Expert
Tougher conditions for the buy-to-let market could backfire and result in amateur landlords selling their properties on to bigger players – reducing properties available to homemovers and first timers. (Daily Mail, May, 2016)
John Charcol mortgage broker Alistair Hargreaves (who also gave his views on the matter in the Daily Mail) states : “I think it’s likely that the changes to the [stamp duty] tax regime will allow the larger, already incorporated landlords to buy more BTL properties, buying from smaller amateur landlords.”
The ramifications could be that there are fewer houses on the market for the likes of first-time buyers and owner occupiers.
Last month the government put a 3 per cent stamp duty surcharge for every additional property landlords purchase. The increase in stamp duty has hit many who were considering the buy-to-let approach and was aimed at loosening some of the demand from the market.
Hargreaves mentions in the Daily Mail that with restrictions (stamp duty, personal lending etc), who else will be able to buy the properties offered for sale by amateur landlords being pushed out of the market? Areas such as London where property prices are astronomical and yields are low, amateur landlords are bound to struggle unless a first timer has an inheritance, parental support or a large income.
He wholeheartedly believes that expert mortgage brokers need to support the little guy – the landlord with one or two but to lets – and make sure that they are holding the properties in the most efficient way possible. If not, the sector will be dominated by the 1 per cent (the rich investors).
You can read more about this topic here.
What Are Your Thoughts?
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