1. Self-employment on the up, mortgage eligibility heading downwards
Almost a quarter of the 15 million UK adults who have been self-employed for more than 12 months - at any time in their career - have been refused a mortgage. A recent Kensington survey also revealed that 10% were unable to secure a mortgage at all.
Men more often than women, and particularly those who live in Scotland, Eastern England and London, are most likely to be self-employed, and UK self-employment figures are running at their highest yet recorded – at 4.6 million, or 15% of the population. Kensington suggest this may rise to 30%, or almost a third of the population, by 2054, so mortgage providers’ reluctance to lend to anyone who has ever been self-employed is of concern.
My thoughts – this is really interesting as no politicians seem to have made the connection between the fall in unemployment mostly being driven by people who are self-employed. This impacts on the number of people who can get a mortgage and if the business is home based, then they may be excluded from renting too.
Politicians, lenders and the housing industry need to address these issues.
2. Impact on homeowners when interest rates rise
Last Thursday I was on ITV’s Tonight programme chatting about the impact of interest rate rises. If you are on artificially low rates thanks to the low interest rate of 0.5%, it’s going to go up and will be likely to reach 2% during 2016. According to brokers that I speak to, there are some amazing rates available so, if you haven’t reviewed your mortgage, now is the time to take a look!
3. Government issues guidance on new Rent to Buy
Communities Secretary Eric Pickles has launched a new £400 million programme to boost building of new rental homes and allow tenants to upgrade to home ownership.
The new Rent to Buy scheme extends the original Help to Buy scheme by offering affordable rents now so tenants can save for a deposit to buy their current or new home in future.
Housing associations and other providers can bid for a slice of the £400 in low-cost loans so they can construct up to 10,000 homes, generally 1- and 2-bedroom flats, across the UK in 2015-2018, half of which will be in London. These properties will rent at below-market rates for at least seven years, when the tenant has first refusal to buy, or rent elsewhere. If the home is sold, housing associations can use any profit to build more affordable homes. If unsold, they can rent out affordably to another tenant.
It’s hoped the scheme, part of the government’s broader £23 billion affordable homes programme for 2015 to 2018, will accelerate the pace of development. For further reading, see the Government rent to buy scheme
My thoughts – this is an interesting scheme as it could help people save tends of thousands towards a deposit. However, that’s assuming the rent doesn’t increase too much each year. If they increase at social rent rates and their wages remain the same (as they are now) then it will be tough to save.
For those that can move back in with Mum and Dad or rent a room, these are still much quicker ways to save for a deposit, but for those who have a young family and no relations, this could be a great scheme.
Read - First time buyer quick guide
4. Will Mayor’s new bank help produce more housing?
Boris Johnson, Mayor of London, has opened a new £200 million investment scheme for developers and housing associations that is intended to accelerate the building of thousands more low-cost homes in London. The London Housing Bank is offering bespoke financial support to fast-track construction of homes, including loans starting at just 1% interest providing the homes are rented at low cost for at least 7 years. Loans are available for up to sixteen years and on repayment developers may sell to current tenants, sell to the market, or retain as long-term rentals. This initiative forms part of a raft of measures to speed up the pace of development, and 100,000 low-cost homes are anticipated over the Mayor’s two terms. It is also intended to help as many as 50,000 Londoners on low incomes to buy or rent in the capital. Large housing providers as well as private sector organisations are being encouraged to apply for loans.
To read more, go to The Mayor's Press Release
My thoughts: This is a great scheme as small to medium sized developers are struggling to get funds. What would be even better is for this to run alongside identifying government land which can be built on.
Read - Making money from property
5. Is it really easier now to renovate your home?
New figures show for the first time that the government’s attempts to reform the planning system and cut red tape have allowed thousands of homeowners to improve their properties. Figures suggest that in the three months to June, councils across the UK gave the green light to 6,500 out of 7,700 home extension applications without forcing applicants to go through the whole planning process.
900 applications out of 1,900 received during the same period for development of office buildings into new homes were also approved. Housing Minister Brandon Lewis commented, “…thousands of homeowners are now able to make improvements to their properties without having to negotiate excessive red tape and bureaucracy… offices that once stood empty have been transformed to help deliver much-needed new homes for communities while maintaining green belt protections.” Planning approvals are now at a 10-year high. For further information, see Planning Freedoms Take Effect
My thoughts: One of the key issues with this is it may be that you don’t need planning permission, but very little communication is being made about the need to comply with Building Regulations which is far more onerous than applying for planning!
Read - Renovating a property