Friday property news update - 23 July
Rental revival, record low rates and scrapping construction forms
4 minutes to read
Record rates
Mortgage rate wars continue to rage, with the launch of an eye-popping 0.99% deal from Nationwide.
The sub-1%, 5-year fixed rate deal is the first of its kind to charge borrowers this record low rate of interest. The mortgage, available to those with a deposit of at least 40%, has been available from Wednesday and comes with a fee of £1,499.
The move follows HSBC UK offering a two-year deal at 0.94% available to borrowers with a 40% deposit. The new lows being hit by rates are supporting demand for housing after the loss of much of the benefit from the stamp duty holiday at the beginning of this month.
Meanwhile, in the US, volatile interest rates are contributing to a drop in mortgage demand.
CNBC reports that Mortgage applications to purchase a home fell 6% last week and were 18% lower year over year. Aside from rate movements, high home prices are weighing on buyer demand.
Rental bounce-back
Residential rental values fell steeply in London and the Home Counties through the pandemic. But the bounce-back is now underway, reports Tom Bill this morning.
Tom introduces the new Knight Frank rental forecast noting that by December this year average rental values will still be 12% below their pre-pandemic level in prime central London. However the forecast points to a recovery to pre-pandemic level by 2023.
Gary Hall, head of lettings at Knight Frank, comments: “After the financial crisis, it took three years for rents to recover and we are expecting the bounce back to be as quick if not faster this time.”
Natural beauty
The Government plans to create four new Areas of Outstanding Natural Beauty (AONB). With the pandemic fuelling people’s desire for space and greenery, the assets offered AONBs are in increasing demand.
The escape to the country trend by house buyers has driven price growth to levels not seen since before the global financial crisis in the prime regional market, and following a record number of exchanges ahead of June’s stamp duty holiday deadline, country property remains in demand.
Research from Chris Druce today shows that the price of a detached house in an AONB is on average 32.7% higher than a detached property located just outside the protected area.
The largest single price premium can be found in the Gower, which was the first AONB to be created in 1956, where a detached property within costs on average 79% more than a detached house located 5km outside of the boundary.
Construction forms scrapped
Housebuilder reports that EWS1 forms will no longer be needed for residential buildings below 18 metres. The move was announced by housing secretary Robert Jenrick yesterday during the second reading of the Building Safety Bill.
Cladding and fire safety has been a contentious issue since the Grenfell tragedy in 2017, EWS1 forms introduced as a result, are designed to record the assessments undertaken on the external wall construction of residential apartment buildings.
A report from an independent fire safety expert group, commissioned by the Government earlier this year, concluded that there was no “systemic risk” of fire in medium and lower rise blocks of flats. Instead, a more proportionate approach to the safety of these buildings was “urgently instituted, requiring action by all market participants”.
The FT adviser has recently reported that the bill for EWS1 forms was being footed by UK lenders. The £100-£150 fee to upload the forms was believed to be discouraging engineers.
The scrapping of this process will come as welcome news for Barclays, HSBC UK, Lloyds, Nationwide Building Society, NatWest, Santander and TSB who were covering the cost of uploading these existing forms, making it easier for lenders to conduct mortgage valuations and determine if a property needs cladding remediation work.
In other news…
Michael Connolly asks: how worried should you be about inflation?
Supply chain disruptions and on-going “pingdemic” leaves business secretary “concerned” about reported food shortage issues. Global venture capital investments hit record high. Liverpool’s Liberal Democrat leader describes World Heritage Status loss as “a day of shame”. HGV driver shortage hits fuel supply chain. High pollution tax imports are mooted by trade secretary. Mercedes-Benz maker announces €40 billion electric vehicle investment, and American Airlines beats revenue estimates.
Photo by Sandro Cenni on Unsplash