Archive for the ‘Home Owner News’ Category

How will the upcoming General Election affect the UK housing market?

Thursday, December 11th, 2014

The UK economy shows no sign of deviating from its growth trajectory with the independent Office for Budget Responsibility (OBR) now forecasting growth of 3 per cent in 2014 and 2.4 per cent in 2015. 

This puts the UK at the forefront of growth forecasts for the western world but there is a cautionary note in that our European Union neighbours, and ultimately our largest trading partners, show little sign of emerging from what has been an economic malaise and, in the worst affected parts of the Eurozone, continuing recession.

As a consequence, if the Eurozone economy does not alter course for the better any time in the near future, it could play a big part in whether the UK growth is tempered in the next year or two.

The General Election, set for May 2015, is currently too close to call in terms of outcome and most commentators believe no single party will command an overall majority.

Once the votes are counted, it seems likely that we may once again have some form of coalition, but this time it is highly likely that several of the smaller parties could hold the balance of power. This could include the Scottish Nationalists Party (SNP) which seems set to benefit with substantial gains from the Labour party in Scotland in terms of the number of seats that they may win in at the Westminster parliament.

The SNP have publically stated that they would not enter into coalition arrangements with the Conservatives but could do so with Labour. The Lib Dems appear to be increasingly falling out with their current Tory coalition colleagues with open public criticism being reined on each other so, although this version of coalition does not look like being repeated in 2015 at present, politicians are pragmatists and power has a habit of changing people’s thinking and forcing compromise when circumstances dictate!

So, does this have any repercussions for the UK housing and mortgage markets? The impending election may subdue the normal seasonal house-buying or moving activity associated with a spring market due to the uncertainty that the election outcome may pose in many people’s minds.

Some buyers may delay any moving plans until the political and subsequent economic policy is more clearly defined, but the market is still anticipating a gross mortgage lending market broadly similar to 2014 of circa £200bn.

The consensus amongst the political parties of all persuasions is of the need to build more homes in the UK and no doubt all will be formulating policy to win our votes in terms of how they propose to go about this.

The concern is that in the event of a hung parliament or a minority government with smaller parties voting tactically on specific policy agendas etc., the country potentially runs the risk of political deadlock with the machinery of government not actually functioning – similarly to what happened in Italy in the past – and, as a consequence, making and implementing policy may become even more difficult.

The recent announcements by the Chancellor in the Autumn Statement around the changes being applied to the Stamp Duty Land Tax (SDLT) were welcomed by the majority in the industry as they introduced a fairer way of applying the tax.

SDLT now works in a similar manner in which income tax is applied, in that you only pay the higher percentage rates on the element above a given threshold and not in the “slab” manner that has been applied until now.

This is forecast to reduce the tax burden and benefit around 98% of home buyers, but it will also cost the Treasury an estimated £800m in terms of the shortfall that will arise.

In addition to benefiting the majority of home-buyers, it should also substantially reduce the number of transactions that are priced just below the former threshold levels which had the effect of large numbers of houses changing hands for £249,999 and £499,999, respectively, which are the principle levels where the tax treatment had the biggest effect, thereby creating a false market at those points where the tax taken previously was most keenly felt.

The Chancellor, having introduced the new charging structure effectively and immediately, also removed the bunching of transactions that has taken place in the past when Stamp Duty holidays or exemption periods have previously been applied.

These have, in the past, been well-meaning in appearing to boost activity for a period, but have inevitably had a detrimental effect on the market once they ceased, as in reality, sales activity is merely brought forward or delayed to benefit the purchaser who stands to gain most from the resultant temporary tax change.

Brian Murphy comments on Mortgage Advice Bureau’s latest mortgage statistics

Friday, August 22nd, 2014

bbc radio 4

The on-going recovery and the introduction of MMR

Thursday, April 24th, 2014

Britain’s economy is now expected to be the fastest growing of any of the G7’s group of major economies, according to the International Monetary Fund (IMF), who now forecast that the UK economy will grow by 2.9% in 2014 – a further increase on the 2.5% forecast only three months ago -and will grow by a further 2.5% next year.

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Some positive news on the house repossession

Monday, May 10th, 2010

The Financial Services Authority recenty published its fourth quarter figures detailing the number of repossessions that had occurred. The overall number alhough nothing to celebrate particularly for those homeowners who have lost their homes did paint a slightly better picture of how borrowers have been coping with the recession.

Early in 2009 the Council of Mortgage Lenders were forecasting 75,000 homeowners would lose their properties in the year. I am glad to say this was one forecast that we were very pleased to see the economists get their assumptions wrong. The overall numbers came in at around 54,000 and although this was an increase in overall numbers to the previous year (47,000) the fact that it is some way short of the forecast demonstrates that the unprecedented low interest rate environment has greatly benfitted many hard pressed families particulalrly in housholds where job loss has occurred.

Many households have relied on two incomes to maintian a particular lifestyle however, where one party has possibly been made redundant often the remaining income can still keep the families head above water although areears may occur while a re-balancing of expenditure takes place. Clearly this is not always the case but low interest rates have undoubtedly helped many borrowers when they have needed it most staving off for many what may have ultimately been repossession.

Furthermore the rise in the number of unemployed although having increased quite significantly from 2008 to date has also not continued its expected march to the often forecast three million. Much of the cause for the plateauing in the unemployment count has been due to many employees forgoing pay increases, agreeing with employers pay cuts, working part time or reduced hours to help emloyers balnce costs with demand and get through the economic downturn. All of these factors will have played some part in both reducing the number of properties that have actually been repossessed and the number of mortgage accounts that are in arrears. This measure has also seen some downward movement. Add to this the pressure that lenders themselves are under to ensure forebearance towards those in difficulty combined with the factors above and we do start to see some positive news.