4. The ai m
•“ r ed t ape over pl anni ng pr oc edur es and m t gage l oans ar e
or
ham
per i ng t he gr owt h of t he house bui l di ng i ndust r y”
•“ al ongs i de t hi s ar e we t ur ni ng i nt o a nat i on of r ent er s ,
m e i n l i ne wi t h t he Eur opean vi ew of pr oper t y owner shi p?”
or
•“ what i s t he i m
pact of Hel p t o Buy ?”
5. Cont ext : t he m ket
ar
•Land val ues r em n l ow and t he econom weak
ai
y
•I ncr eas i ng r at e of pr i vat e r ent i ng, but r ent s not m e
or
expensi ve t han m t gages i n hal f of t he UK
or
•Gover nm
ent ac t i v el y seeks t o unbl ock pl anni ng hol d ups
t hr ough “ At l as”
•2, 291 hom pur chases c om et ed under New Buy ( t o M ch 31)
e
pl
ar
•3, 000 r eser vat i ons per week under Hel p t o Buy: si nce i t
st ar t ed…
7. Housebui l der vi ews: pr e H2B
The constraint
on mortgages
has been an
encumbrance
to sales
•
The whole market
had started to
stagnate [due to]
large deposits and
restricted lending
on mortgages…
There was a real
shortage of first
time buyer funding
available
The overall
mortgage pot has
shrunk, very
substantially, and if
there is less money
available then
clearly it is going to
go to those parts of
the market that are
high value and
lower risk
After the 2007 property
bubble and subsequent
crash, the market needed
to rebalance. This
happened between 2007
and late 2012. By the end
of 2012 there was a good
match between demand
and availability
Som pl ayer s l ef t t he m ket / m ged and t hose l ef t have l ess
e
ar
er
capi t al
8. Housebui l der vi ews: pr e H2B
•
New Buy and bui l der s’ shar ed equi t y schem
es – l i m t ed success
i
“We had NewBuy come in 18 months ago which was quite a difficult process with banks
and mortgage lenders. That had an immediate effect, [but] slow uptake... The reasons
are the fees payable etc.”
“The problem that we had in the industry was we all had quite a lot of cash locked up in
the balance sheet for these products.”
“The other problem was with us having to contribute half as well; you were basically
spending a lot of your working capital.”
9. Top bar r i er s t o buyi ng
•Hi gh pr oper t y pr i ces, m t gage avai l abi l i t y and di f f i cul t y
or
i n qual i f yi ng ar e t he t op bar r i er s
10. Im
pact s of cr ash
•M n i m
ai
pac t s ar e secur i ng m t gages, i nc r eased concer n
or
about chi l dr en’ s f ut ur e and r et ai ni ng any di sposabl e i ncom
e
11. Im
pact s of cr ash
•M n i m
ai
pac t s ar e secur i ng m t gages, i nc r eased concer n
or
about chi l dr en’ s f ut ur e and r et ai ni ng any di sposabl e i ncom
e
Especially homeowners (67%)
and 45+yr olds (74%)
and C2 (70%)
18-24 yr olds (18%) less likely than
all others
Especially renters (41%)
and younger people:
18-24 yr olds (43%) and <45 yr olds
(32%) more likely than 45-64 yr olds
(9%)
12. Hel p t o Buy
Helpfulness
•Hal f of t hose who have or ar e act i vel y c ons i der i ng buyi ng a
hom have hear d of Hel p t o Buy ( 52% , under a t hi r d of t hese
e
)
t hi nk i t wi l l hel p t hem
.
18-24 year olds
C1 / DE
Renters
HTB applicants/ intenders
AB
Homeowners
55+ yr olds
C2
Awareness
13. Bui l der s’ at t i t udes t o H2B
Helped increase funding availability
Lenders responding positively to HTB
Better than NewBuy/ First Buy
Helpfulness
Positive
Helped to rebuild confidence and competition
in the mortgage market
Enquiries, off-plan sales & building rates
Scope well designed
o
“Good f
b ut n
uilders,
r houseb
How sustainable is it?
Funding may run out before the end of 3 yrs
What happens when it finishes?
s.”
axpayer
ot for t
Negative
14. M t gage Guar ant ee
or
Expected to involve a range of lenders
Lenders offering “decent rates and not restricting it
through other mechanisms”
Helpfulness
Positive
Hope offers may be designed to assist the second
hand market
Controls in place to avoid boom and bust
T&Cs unknown
Too early to say
Scope too broad?
Introduced too late
How long is the quota going to last?
May lead to increased house prices
Hiding an underlying wider market fragility?
Negative
15. Per cei ved i m
pact of H2B
•Over whel m ngl y posi t i v e!
i
“Things have been improving in the
mortgage market over the last period.”
"Definitely is stimulating house building.
The equity loan ticks all the boxes for
affordability of house purchases... it's
given us a much more confident position
than we were pre-budget”
“Increased sales ... Help to
Buy really helped the
market”
“We should get more normalisation, standard 90-95%
mortgages coming back at more favourable rates..”
16. Per cei ved i m
pact of H2B
•Over whel m ngl y posi t i v e… BUT!
i
“We also need a functioning planning system and we need
to tackle regulatory burdens on the industry.”
“I see this as being not in place
beyond May 2015 and the election”
“I think there are a lot of things
happening at the moment, not just
Help to Buy”
“[Lack of] capacity in terms of skills, bringing trades, sub
contractors, suppliers. Also the ability to recruit good staff,
as the industry lost a lot of good staff in the down turn.”
And anecdotally the bank of Mum & Dad is/ has been crucial in helping younger people get a mortgage deposit together
Number of first time buyers up – ‘The number of first-time buyers rose to its highest level since 2007 in May, according to the Council of Mortgage Lenders, after banks and building societies became more willing to offer loans to borrowers with small deposits.
A total of 25,100 loans were granted to newcomers to the property market during the month, a 29% increase on April's figure and up by 42% on May 2012, the CML said.
It was the highest monthly figure recorded since November 2007, shortly after the property market peaked and house prices started to fall, and a marked contrast to the 8,500 loans granted in January 2009.’ Guardian 12th July 2013
Home ownership peaked 69% in 2001, fell t0 64% in 2011 and expected to have fallen further since then http://www.guardian.co.uk/money/2013/jun/28/new-class-landlords-profiting-generation-rent. Social renting down from 31% in 1981, private renting up from 11% in 1981– both 18% in 2011. Private renting up from 10% in2008 (crash) to 15% in 2011 and i same time the proportion owning a home with a mortgage fell from 40% to 35%. (ONS) http://www.bbc.co.uk/news/uk-21697044. Unaffordable rents - Resolution Foundation ‘The report, Home Truths, found that in 125 of Britain's 376 local authorities, a couple with a net income of £22,000 a year and one child would have to spend more than 35% of their income to rent the least expensive two-bedroom property, making it unaffordable to live there. In 10% of local authorities rent would soak up more than half the family income after tax.. In 2012, the Joseph Rowntree Foundation calculated that a family with one child needed £19,510 after housing and childcare costs to have enough money for basic necessities..’ http://www.guardian.co.uk/money/2013/jul/15/private-rents-price-out-poorer-families 160713
Most stats from Savills’ A demand for residential development land, 14 May 2013
Rent levels http://www.independent.co.uk/property/rising-rents-price-poorer-working-families-out-of-a-third-of-britain-8708938.html
Reservations stats = FT http://www.ft.com/cms/s/892bf0bc-b897-11e2-a6ae-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F892bf0bc-b897-11e2-a6ae-00144feabdc0.html&_i_referer=#axzz2YT0qQRPl-
From 2007, builders attempted to overcome restrictions on lending by offering shared equity schemes
High property prices – esp younger and C1 C2, also Scotland, NW, Wales & SE
Lack deposit – esp younger, E Mids and Wales , less NE, W Mids, Eastern and SW
Also qualifying esp 35-44 yr olds
Lack mortgage availability - esp 18-24
Lack property esp AB, W Mids, SE least for Wales
Falling value – less for 18-24 and NE & Wales, more for NW, W Mids
No barriers – least for younger & NW, more for NE
Perceived impact on ability to secure a mortgage greatest amongst lower social grades
Better than NewBuy: Because HCA cut their teeth on the First Buy schemes they were quite well honed for HtB. When we registered online for HtB we had an option where you could request a fast approval process which we did and they turned it around quicker than the normal time frame which was welcome. Anon (NB NewBuy was ‘tortuous’)
Jury’s out – but hopeful!
“Virtually all builders in the UK are not building efficient delivery rates on sites, we have been constrained by demand ... on an average site we are building only 60% p.a. of what we would have built in the better days. There is huge potential to increase the number of plots completed on each site each year. So that gives confidence to get more efficient build rates.” Anon
“Virtually all builders in the UK are not building efficient delivery rates on sites, we have been constrained by demand ... on an average site we are building only 60% p.a. of what we would have built in the better days. There is huge potential to increase the number of plots completed on each site each year. So that gives confidence to get more efficient build rates.” Anon
So, given these constraints, is there a bubble coming? .....
