Residential Property Review – May 2021

Queen’s Speech is ‘significant’ for housing market

A key announcement in the Queen’s Speech on 11 May was a new Planning Bill, which aims to simplify and speed up the planning process using a digital, map-based service, allowing more active public engagement in the development process.

The reforms should allow homes, schools and hospitals to be delivered at a faster pace across England. Melanie Leech, Chief Executive of the British Property Federation, said the government intention is to create a “seismic shift in how local authorities plan for and deliver new housing, simplifying the process to put an end to inefficiencies and delays.”

The speech also confirmed:

A reform to leaseholds, to put an end to ground rents, as announced by Housing Secretary Robert Jenrick, in January 

As part of the Building Safety Bill, a new Building Safety Regulator (BSR) is to be set up, specifically to oversee all high-rise buildings, as well as other buildings, through oversight of the building control profession

A Renters Reform White Paper is to be published this autumn, with legislation to follow soon after.

Strong demand and a lack of supply drive prices

According to the latest Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey, buyer demand has remained steady and consistent across the UK, but the lack of fresh listings is causing a mismatch in supply and demand, consequently driving house prices up.  

The survey confirms ‘insufficient’ stock levels, with the average number of properties on estate agents’ books at just 40, having briefly stood at 46 back in December.    

Zoopla has also reported on the mismatch, stating that home buyer appetite is up 27.5% this year compared to average levels in 2020, whereas the number of listings is 19% down on the 2020 average. In particular, there has been a sharp drop in the number of three and four-bedroom houses on the market, as family homes remain the most in-demand properties.

Top cities revealed for residential investment

Cambridge, Edinburgh and Bristol are the top three cities in the UK for residential property investment, according to a new report from Colliers International, comparing key cities from the UK against 20 indicators in the four main areas of economics, property, education and liveability.

Cambridge achieved first place thanks to its accessible and attractive quality of life for residents, its strong reputation for science and tech businesses, as well as its university’s top ranking in the UK.

Edinburgh took top spot in the UK in terms of economics, due to its recent performance and demographics. The Edinburgh economy grew at an average annual rate of 1.8% between 2010 and 2020 and is expected to expand at 2.3% p.a. between 2021 and 2025. The city’s population is forecast to grow at an average rate of 1.2% each year between 2020 and 2030.

Coming in at third place, Bristol ranked highly due to its strong economy, house price growth, skilled and educated workforce, strong rental yields and low level of income inequality,

Residential Property Review April 2021

Spring sees the busiest ever housing market

Growing optimism due to the vaccine rollout, the return of low-deposit mortgages and the Stamp Duty holiday extension for England and Wales, have contributed to make this spring the best time to be a property seller in a decade, according to property website Rightmove.

The online property portal reported a record 9.3 million visits on one day (7 April), with visitors spending more than two billion minutes on the website in March. There is now the greatest ever excess of demand over supply. Despite record numbers of prospective buyers and prices increasing, buyers do not appear to be deterred, with properties selling in an average of 45 days in the first two weeks of April.

Property expert at Rightmove, Tim Bannister, expects a strong market for the rest of the year, “Housing market activity remains high in Scotland, where there has been no extension to the Land and Buildings Transaction Tax holiday, which has now come to an end. This suggests that the same could happen when the tax holidays start to come to an end in England and Wales.”

Government launches 95% mortgage guarantee scheme

The government-backed 95% mortgage guarantee scheme, originally announced in the Budget, was launched on 19 April, aiming to help first-time buyers or homeowners obtain a mortgage with a 5% deposit to buy a property of up to £600,000.

The scheme offers lenders the guarantee they need to provide 95% mortgages and is subject to other affordability and credit checks as usual. There are currently five high street lenders offering mortgages under the scheme: Lloyds, Santander, Barclays, HSBC and NatWest. Virgin Money is due to follow next month. Some other lenders, such as Accord, had already returned to 95% mortgages without using the scheme.

Chancellor Rishi Sunak said, “By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, boosting the sector, creating new jobs and helping people achieve their dream of owning their own home.”

Reaction to the scheme across the industry has been mixed. Trussle’s Head of Mortgages Miles Robinson said, “With lenders still viewing the high loan-to-value market as risky, interest rates on the new 95% LTV deals are more expensive, with some close to 4%.” Mark Hayward, Chief Policy Advisor at Propertymark, said, “We are now very pleased to see further support for both first-time buyers and current homeowners looking to buy property or move up the housing ladder.”

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments

Sense of urban revival

Last year, the news was all about a desire to seek a fresh start in more spacious properties, open spaces and away from cities, as more people shifted to working from home. Whilst the demand for such locations shows no signs of slowing, there has been renewed demand in prime regional towns and cities.

According to Savills, many buyers are now looking for somewhere a bit more vibrant, with plenty to offer once social distancing measures begin to be relaxed. Top-performing cities include Oxford, Winchester and Bath, where prime values increased by 3.7%, 4.0% and 3.2% respectively during the first quarter of 2021.

The pandemic has also prompted a desire to relocate closer to family, after time spent apart, with 48% of respondents Savills naming this as a top priority, compared to 39% a year previously.

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