1.
The UK housing market continues to improve across the country, though London would appear to be in a league of its own. We are still far away from the heady days of 2007/8 though.
Flats, in particular, are in high demand, fuelled by buy-to-let investors and the huge surge in first time buyers.
In fact, first time buyers account for over 56% of domestic mortgages in London compared to 46% throughout rest of UK and, because of the marked increase in property prices, are borrowing on average 3.67 times their income compared to 3.30 times throughout the remainder of the UK.
This means that buyers are borrowing more because they now have to pay more, and sellers are asking for 5.9% more for their properties than last year. Prices in areas of London such as Battersea and Clapham have risen between 15% and 20% since the beginning of 2013.
House prices across the country could rise a further 11% according to the IMLA (Intermediary Mortgage Lenders Association) who fear a housing bubble, largely because of the ‘Help to Buy’ government funding stimulus. Some industry insiders have suggested that ‘Help to Buy’ should be only made available for property outside London.
It has also been suggested that the second stage of ‘Help to Buy’ (the mortgage guarantee offer) will also affect market prices, but most believe that it will be positive news for first time buyers.
Bank of England Governor, Mark Carney, sought to allay any such fears about a housing bubble, when he told business leaders on 28 August 2013 that the Bank’s Financial Policy Committee had the tools, such as the ability to curb lending, in order to avoid such a bubble.
2.
The price war between mortgage lenders is as competitive as ever; mortgage lending is at its highest levels for five years and there have been recent rate cuts of up to 45%.
Interest only mortgages are also creeping back, often described as ‘low start mortgages’, which are interest-free for a determined period e.g. three years.
It has also become easier for the self-employed and contract workers to obtain mortgages, reflecting new and current changes in working patterns. Nearly 14% of the workforce falls within these definitions.
There is still only a limited choice available for the self-employed, and they will still need to produce three years of accounts and a completed HMRC form SA302.
3.
The top end of the London market, fuelled by largely foreign investment, is on a planet of its own. Prices are simply eye-watering and still rocketing ahead.
However, there have been some interesting side developments. Camden Council, spurred on by residents of such areas as Primrose Hill, is tackling the issue of long-term empty homes. Residents are concerned about the fact that investors own as many as four or five properties in their area, which in turn has increased prices and damaged local businesses and communities.
Camden already has a successful scheme in place whereby they have increased council tax on those properties by 50%, resulting in a marked decrease in long-term empty properties from 248 to 162.
The local authority is considering whether to increase the rate of council tax by 200% for those houses empty for more than two years.
Kensington and Chelsea have levied the highest s.106 agreement fee (some £800,000) on a domestic renovation, for planning permission concerning the development of a massive basement project. These monies will contribute towards affordable housing for the borough’s less well-off residents.
Westminster levied an incredible £3.2 million on a commercial development project in Piccadilly; again those monies will go towards affordable housing in that borough.
If you are buying or selling property or if you need advice on any of the issues mentioned here, speak to any of our specialist property solicitors by either completing our online enquiry form here or by calling us on 0207 387 2032.
