Thursday, 14 December 2017

New-builds fall short by 100,000 per year

A CONTRIBUTING factor to the low stock/rising prices situation is that the UK is currently building around 100,000 too

A CONTRIBUTING factor to the low stock/rising prices situation is that the UK is currently building around 100,000 too few homes each year that are needed to keep pace with demand, according to some experts.

Simon Rubinsohn, RICS chief economist, said, “It remains to be seen how successful the government’s latest [autumn budget] set of initiatives will be in driving up the rate of new-build, but with the best will in the world it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline.’

But it is hoped George Osborne’s plans will help at least some first-time buyers who get an extra £2.3billion towards starter homes, or those Londoners who’ve now been offered a 40 per cent interest-free loan via Help to Buy.

Until now, Help to Buy, the government’s loan scheme, has rarely been used in London because prices are so high — a typical home in Greater London costs about £520,000 — but that will change from this coming April.

This is when the London Help to Buy equity loan scheme kicks in. It is similar to the existing national initiative — except that Londoners can borrow up to 40 per cent of the home’s value instead of 20 per cent.



There’s no age limit on applicants, but you must contribute at least five per cent as a deposit and be able to secure a mortgage for up to 55 per cent of the home’s cost.

There’s also a top price of £600,000 for the home, which must be in a London borough.

“With rumours that interest rates might rise earlier than expected, this will help thousands realise their aspirations of getting on the ladder,’ said one London estate agent.

At Hamptons International, which has its Henley branch in New Street, residential research director Fionnuala Earley said: “Londoners fared well from the autumn statement housing measures. While some of the measures were aimed at increasing home ownership, the London Help to Buy scheme is the most generous.’

RICS head of policy Jeremy Blackburn said: “A push towards affordable home ownership should not come at the expense of affordable homes for rent. If cities such as London are to thrive we need to ensure that housing can be provided for all of its workforce — home ownership can only go so far and even shared ownership may prove too expensive for some. The chancellor was short-sighted not to incentivise affordable homes for rent.’

In Henley, the average cost of renting a home is currently £1,500pcm, and with things as they stand, this is only set to rise. Or will it? Perhaps with extra stamp duty now payable on buy-to-let properties, more lower-end homes will become available to those who would ordinarily have no choice but to rent. And with more people buying at the lower end, perhaps rents will come down…

In the autumn statement, chancellor George Osborne announced a three per cent surcharge on each stamp duty band where the property is being purchased as a buy-to-let investment or as second home. This could result in even more competition between first-time buyers and investors.

“We’re expecting to see a surge of interest from investors looking to purchase investment properties before April 2016, in order to avoid the extra charge,’ says Vincent Courtney of Romans.

“The extra stamp duty may not be positive news for landlords, but it’s important to note that buy-to-let is a long-term investment and in that sense it can still be very lucrative, with house prices predicted to rise by approximately 25 per cent in the next five years.’



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