Bank of England to review mortgage affordability as Covid-19 creates 'tight conditions’ for borrowers

The review by the Financial Policy Committee comes amid concerns that first-time buyers are struggling to get mortgages.

The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder.

Its Financial Policy Committee (FPC) is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate.

The rules, which limit the amount people can borrow relative to their income and ensure homeowners could still afford repayments if interest rates jumped by 3%, are thought to have impacted first-time buyers particularly hard.

The review comes as the number of mortgages available to people with only small deposits has nosedived, with lenders responding by becoming more risk averse in the face of the Covid-19 pandemic.

“Mortgage credit conditions remain tighter than at the start of the year, particularly for high loan to value mortgages,” according to FPC meeting notes in December 2020.

“This reflects reduced risk appetite from lenders due to the economic outlook, as well as operational constraints in meeting the current high demand for mortgages.”

The FPC is due to report its findings next year.

Why is this happening?

Since June 2014, the FPC has recommended that no more than 15% of mortgages advanced by individual lenders are awarded to people borrowing 4.5 times their income.

It also suggested lenders ensure borrowers could still afford their mortgage repayments when their deal ended. At this point, a lender is moved onto a reversion rate of repayment, which is typically 4.5% or higher if interest rates have risen by 3%.

The move was intended to protect the banking system from a high level of household debt following the financial crisis of 2008. However, the reforms were introduced at a time when interest rates were expected to rise by 2.25% during the coming five years.

The Bank of England base rate currently stands at a record low of 0.1%. Interest rates are now expected to stay low for a longer period of time, making it easier for borrowers to service their debts and meaning the current affordability rules may no longer be appropriate.

Who does it affect?

The review of lending rules is good news for first-time buyers who are more likely to struggle to meet the affordability tests than those who have high levels of equity in their home.

Although the FPC said there was no evidence that the current rules had limited mortgage availability, it pointed out that credit conditions had tightened recently, particularly for people with only small deposits, while rates on these mortgages were also higher.

There are currently only eight mortgages available for people with a 5% deposit, compared with 391 in March this year, while the number of different deals for people with 10% deposits has dropped to 88 from 779 during the same period, according to Moneyfacts.

At the same time, the average two-year fixed rate paid by people borrowing 90% of their home’s value has increased by 1.17% during the past year.

What’s the background?

The review comes after Prime Minister Boris Johnson promised to help first-time buyers by increasing the availability of mortgages for people with small deposits.

In his speech at this year’s virtual Conservative Party conference, Johnson announced plans for a new scheme for people with 5% deposits, in a bid to turn “generation rent into generation buy”, although further details were not given.

Meanwhile, the government’s flagship Help to Buy equity loans scheme will be available to first-time buyers from April next year, but applications open on 16 December.

The scheme enables people to purchase a new-build property with a 5% deposit which the government tops up with a five-year interest-free loan.

Top three takeaways

• The Bank of England is reviewing mortgage lending rules which could make it easier for first-time buyers to get on to the property ladder

• It is looking at whether the affordability criteria that borrowers must pass in order to qualify for a mortgage is still appropriate

• The review comes as the number of mortgages available to people with only small deposits has dived as lenders become more risk-averse in the face of the Covid-19 pandemic.

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by Blackstones

Q&A: 'Housing market this Christmas is set to be the busiest in more than a decade'

Head of research, reveals what's behind a busy end to the year.

Q. Why is overall buyer appetite still higher than this time last year?

A. Buyer demand soared during the summer after lockdown, but has since moderated - even so, it is still 34% higher than this time a year ago.

The first shutdown of the housing market earlier resulted in a build-up of demand which has come back to the market since then. The Chancellor’s stamp duty holiday has also acted as an incentive to move home now, with the average bill falling by £4,500.

The pandemic has been the catalyst for more longer-term trends too, however. Continuing lockdowns and restrictions, as well as the shift to working from home, have meant that people are re-assessing what they want in a home, with some homeowners carrying out a once-in-a-lifetime re-evaluation of how and where they want to live.

Q. Will this trend continue over the next few months?

A. Absolutely. Buyer demand levels are set to hold firm for the rest of this year. There’s also a cohort of buyers – those carrying out a major re-appraisal of their homes and lifestyles – who will still want to move home beyond the stamp duty holiday deadline in March next year. The continuing restrictions, coupled with new working practices for many office-based workers which are probably here to stay, are continuing to prompt more re-evaluation of home.

Q. Is the number of homes coming onto the market soaking up this demand?

A. Yes, the elevated levels of buyer demand are encouraging more people to put their homes up for sale - many buyers are sellers, too.

This combination of sustained buyer appetite and more homes on the market has boosted overall activity levels.

The number of new sales agreed is running 38% higher than a year ago – and we expect this trend to continue in the weeks ahead.

Q. What’s the forecast for Christmas and the new year?

A. Busy! Activity in December – and the run-up to Christmas – is expected to be the strongest in more than a decade.

The pipeline of sales is now nearly 40% bigger than this time last year. The overall number of homes sold in 2020 is set to be 1.1m in 2020 - just 6% lower than in 2019. It’s remarkable given the outlook – and the complete closure of the housing market - earlier this year.

Perhaps unsurprisingly though, the number of homes sold in Scotland, Wales and Northern Ireland is expected to be lower than last year by up to 12%, because their housing markets were shut for longer than England’s.

All of this activity has meant that annual house price growth is now 3.5%, the highest for almost three years. Some 80% of privately-owned homes are in areas where annual house price growth is more than 2%.

We expect UK annual house price growth to hit 4% by the end of the year.

Sales will spill over into the new year as buyers rush to beat the stamp duty holiday deadline, with 100,000 additional transactions set to complete before the end of March.

But of the sales agreed in January, we expect just half to complete in time to get the tax break.

Q. With projections that house price growth will be 4% by the end of the year, how resilient is the housing market?

A.The housing market has been one of the bright spots of the economy this year. And this has been reinforced by the government which – after the first lockdown – has kept the housing market open for business.

Lockdowns and restrictions as well as changing working patterns as a result of the pandemic have prompted a complete sea-change in the way people view their homes, and this will continue to support the housing market.

It’s also worth noting that while first-time buyers and those with small deposits have been hit by growing economic uncertainty and reduced mortgage availability, existing homeowners – particularly second and third steppers – are becoming more interested in moving up the housing ladder. These wealthier demographics aren’t so sensitive to wider economic headwinds and are buying homes with bigger price tags.

Q. What’s in store for the housing market in 2021?

A. A significant number of sales will go over the line in the first few months of the year as the stamp duty holiday draws to a close. We expect this to level off as normal stamp duty is re-introduced.

The overall number of homes sold in 2021 are set to be in line with 2020. Meanwhile, we predict annual house price growth will be at 1% by the end of next year as weaker market sentiment and economic uncertainty eases the upward pressure on prices.

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by Blackstones

Three-tier system after lockdown 2: what will the “tougher” coronavirus measures mean for the property market?

With the national lockdown in England lifting on 2 December, we explain what impact the government's strengthened tiered system could have if you’re trying to buy or sell a home.

Boris Johnson has announced plans for England to return to a three-tier system to combat the Covid-19 pandemic once national lockdown ends on 2 December.

Speaking to Parliament via video link on Monday, Johnson said: “We are going to go back to a regional tiered approach, applying the toughest measures where Covid is most prevalent.

“And while the previous local tiers did cut the R number, they were not quite enough to reduce it below 1, so the scientific advice, I am afraid, is that our tiers need to be made tougher.”

What the different tiers mean:

Tier 1 - medium alert

Tier 2 - high alert

Tier 3 - very high alert

The good news is that under the government’s new advice, the housing market remains open for business, whether you’re buying, selling, renting or letting.

Across the board, estate agents remain open and physical property viewings are allowed, with comprehensive advice on how to follow social distancing guidelines inside homes.

And others in the housing market, such as conveyancers, tradespeople, and professional movers, can continue to operate too.

It’s worth remembering that Zoopla, like other property portals, is open 24/7. That means you can do a lot of your property search online, from exploring our news, guides and insights, and checking out the prices of recently sold properties, to registering to get instant alerts for exactly your type of property - and save as many searches as you want.

Richard Donnell, our head of research and insight, said: “We’ve already seen how the first lockdown led to people carrying out a once-in-a-lifetime re-evaluation of their homes and lifestyles, with a focus on prioritising space. And the latest restrictions will continue to support this trend – particularly for those who are more financially secure.”

Meanwhile, the stamp duty holiday is continuing to act as an incentive for buyers to complete a purchase before the tax break ends on 31 March 2021.

However, with different regions in different tiers, it’s a good idea to find out how your local housing market is operating in a Covid-19-secure way.

Tier 1 - medium alert

In tier one areas, all businesses and venues can continue to operate in a Covid-secure way, other than those that are currently closed by law, such as nightclubs.

Schools, universities and places of worship can remain open, and indoor sport and exercise classes can continue to take place. People must not meet in groups of more than six either indoors or outdoors, other than where a legal exemption applies, such as for a wedding or funeral

Find full details and the latest government guidance here.

What does tier 1 mean for the property market? 

Tier one essentially means business as usual for the property market, but with as many safety restrictions in place as possible.

Can I view properties in a tier 1 area?

Yes.

Property viewings can continue to happen with Covid-secure measures in place.

Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time.

Sellers and estate agents may choose to wait outside the property or decide not to be present while viewings are undertaken.

Open house viewings are not allowed at this time.

If any member of either the household whose home is being viewed, or of the household viewing the property, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.

The government is encouraging the use of virtual viewings before visiting properties in person in order to minimise public health risks.

Are estate agents in tier 1 open?

Yes.

However, the toughened tier system means more people are being encouraged to work from home where possible under tier one.

This might mean some agents may choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.

Can I move house under tier 1?

Yes.

Estate and lettings agents, removers, valuers and people in sales and lettings offices and show homes can continue to work under the tiered system as they did during the most recent national lockdown.

Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.

Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves if, for example, one of those involved becomes ill with Covid-19 or has to self-isolate.

Which English regions are in tier 1?

South east

• Isle of Wight

South west

• Cornwall
• Isles of Scilly

Tier 2 - high alert

Tier two is for areas with a higher or rapidly rising level of Covid-19 infections.

Anyone living in a tier two area must follow all of the tier one rules, and also not meet with anybody outside of their household or support bubble in any indoor setting, including their home or a public building.

Meetings of up to six people from outside the same household or bubble can take place outside in public spaces and gardens.

Find full details and the latest government guidance here.

What does tier 2 mean for the property market? 

Under tier two, the majority of businesses can continue to operate as usual and this includes estate agents and other services related to moving house, such as conveyancers and removers.

Can I view properties in a tier 2 area?

Yes.

In-person property viewings can still take place, with appropriate precautions.

The same advice applies to tier two property viewings as it does in tier one.

This means property viewings can continue to take place with Covid-secure measures in place.

Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time. Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.

Open house viewings are not allowed at this time.

The government is encouraging the use of virtual viewings before visiting properties in person to minimise public health risks, and socially distant viewings.

If any member of either the household whose home is being viewed, or of the household viewing, shows symptoms of Covid-19 or is self-isolating, then in-person viewing should be delayed.

For the latest government advice in full check here.

Are estate agents in tier 2 open?

Yes.

However, as with tier one, the toughened tier system means more people are being encouraged to work from home where possible.

This might mean some agents choose to work from home, continuing to work digitally and opening their branch by appointment only.

Can I move house under tier 2?

Yes.

The government has been clear that the property market is staying open even as restrictions are toughened, and during the second national lockdown moving services continued with Covid-secure measures in place.

This means estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.

Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.

Advice from the government encourages everyone involved in a home move to be as flexible as possible and to be prepared to delay moves, for example if one of those involved becomes ill with Covid-19 or has to self-isolate.

Which English regions are in tier 2?

North west

• Cumbria
• Liverpool City Region
• Warrington and Cheshire

Yorkshire

• York
• North Yorkshire

West Midlands

• Worcestershire
• Herefordshire
• Shropshire and Telford & Wrekin

East Midlands

• Rutland
• Northamptonshire

East of England

• Suffolk
• Hertfordshire
• Cambridgeshire, including Peterborough
• Norfolk
• Essex, Thurrock and Southend on Sea
• Bedfordshire and Milton Keynes

London

• all 32 boroughs plus the City of London

South east

• East Sussex
• West Sussex
• Brighton and Hove
• Surrey
• Reading
• Wokingham
• Bracknell Forest
• Windsor and Maidenhead
• West Berkshire
• Hampshire (except the Isle of Wight), Portsmouth and Southampton
• Buckinghamshire
• Oxfordshire

South west

• South Somerset, Somerset West and Taunton, Mendip and Sedgemoor
• Bath and North East Somerset
• Dorset
• Bournemouth
• Christchurch
• Poole
• Gloucestershire
• Wiltshire and Swindon
• Devon

Tier 3 - very high alert

Tier three is reserved for areas in England where transmission rates of Covid-19 are causing the greatest concern.

People living in these areas are not allowed to meet anybody outside of their household or support bubble in an indoor or outdoor setting, apart from open public spaces such as parks and beaches, where the rule of six will still apply.

The public are also advised not to travel in and out of these areas, other than for work, education, accessing youth services or caring responsibilities.

What does tier 3 mean for the property market?

The government has been clear that the property market is staying open even as restrictions are toughened, and during the latest national lockdown moving services continued but with Covid-secure measures in place.

However, the government has called for flexibility among movers and sellers under the tightest coronavirus measures, should plans have to change due to any of the households involved contracting or being exposed to Covid-19.

Can I view properties in a tier 3 area?

Yes.

In-person viewings are still allowed under the highest Covid-19 tier.

However, some estate agents, sellers and buyers may decide to postpone viewings  while restrictions are in place.

That said, renewed lockdown measures may also heighten people’s desire to move if they are unhappy with their current accommodation.

Virtual viewings can continue to take place and are likely to be offered by estate agents in the first instance so that any in-person viewings are given to the most interested prospective buyers.

As in the lower tiers, Covid-secure measures should be firmly in place during in-person viewings.

Such measures include the wearing of face coverings, regular hand washing, keeping doors and windows open for good ventilation during the viewing, and only two prospective buyers from the same household entering the property at a time. Sellers and the estate agent may choose to wait outside the property or decide not to be present while viewings are undertaken.

Open house viewings are not allowed under tier three or any of the lower tiers.

If any member of either the household whose home is being viewed, or the household viewing, shows symptoms of Covid-19 or is self-isolating, then an in-person viewing should be delayed.

Are estate agents in tier 3 open?

Yes.

However, as with tiers one and two, the toughened tier system means people are being encouraged to work from home when possible.

This might mean some agents choose to work from home, continuing to work digitally and remaining open at branch-level by appointment only.

Can I move house under tier 3?

Yes.

Estate and lettings agents, removals, valuers and people in sales and lettings offices and show homes can to continue working under the tiered system.

Meeting with people outside your household or bubble “to facilitate moving home” is listed as one of the government’s exemptions from gatherings limits across all tiers.

Which English regions are in tier 3?

North east

• Hartlepool
• Middlesbrough
• Stockton-on-Tees
• Redcar and Cleveland
• Darlington
• Sunderland
• South Tyneside
• Gateshead
• Newcastle upon Tyne
• North Tyneside
• County Durham
• Northumberland

North west

• Greater Manchester
• Lancashire
• Blackpool
• Blackburn with Darwen

Yorkshire and The Humber

• The Humber
• West Yorkshire
• South Yorkshire

West Midlands

• Birmingham and Black Country
• Staffordshire and Stoke-on-Trent
• Warwickshire, Coventry and Solihull

East Midlands

• Derby and Derbyshire
• Nottingham and Nottinghamshire
• Leicester and Leicestershire
• Lincolnshire

South east

• Slough (remainder of Berkshire is tier 2: High alert)
• Kent and Medway

South west

• Bristol
• South Gloucestershire
• North Somerset.

What about Scotland?

Scotland’s government has imposed a five-level system of coronavirus measures.

Currently, there are 11 areas in west and central Scotland now in the highest level of Covid-19 restrictions, which go from zero (lowest) to four (very high risk).

Can I view properties in-person in Scotland?

Yes.

The Scottish government’s guidance on property viewings emphasises a virtual-first approach.

This means in-person property viewings are permitted, but it is recommended that you view properties virtually in the first instance if possible and only proceed to a physical viewing if you are interested in offering on the property.

Can I move house in Scotland?

Yes.

In Scotland, people can continue to move under all five levels, and to and from areas in different levels.

However, the government suggests people may wish to consider whether they can postpone a move and related activities in areas subject to level four.

You can read the latest guidance from the Scottish government on moving home here.

What about Wales?

Wales recently emerged from a four-week “firebreak lockdown” and no tier-based Covid-19 restrictions are currently in place.

This means the property market can continue to operate within coronavirus safety measures.

People living in Wales may:

• move home
• market a residential property for sale or rent and prepare a residential property for persons to move into
• visit estate or letting agents, developer sales offices or show homes for the purposes of the purchase, sale, letting or rental of residential property
• view a residential property.

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by Blackstones

The 20 UK locations where homes sell the fastest

Where do homes sell like hot cakes? Our latest research has the answer and also shows that three-bedroom houses sell faster than any other property type.

We’ve analysed our portal data to find the locations in Britain where homes sell most quickly. Our research identified 20 regions where properties sell in around 30 days or faster.

Falkirk in Scotland is the UK’s fastest-moving location with listings there taking an average of just 20 days to go from “for sale” to “sold subject to contract”.

Bridgend, Wales and Waltham Forest, East London were the joint second speediest markets, with offers being accepted on homes in both locations just 24 days after they were first listed.

The Midlands dominated our top 20, accounting for eight of the locations where homes sell in the shortest time frame.

By contrast, the South of England hardly featured on the list, with only three regions (just one of which was in London) earning a spot among the top 20.

What’s driving fast sales?

Pent up demand following the first Covid-19 lockdown has led to a surge in the UK property sales pipeline which is 50% bigger than this time last year

Tom Parker, our consumer spokesperson, said: “With a potential saving of up to £15,000, the rush from buyers to benefit from the stamp duty holiday is very much on.

“Of course there is still a significant amount of work to be done once a property is under offer, but properties being snapped up quickly by eager buyers is the first hurdle to leap if you want to make that saving.

“We’d urge buyers to act quickly and decisively in their hunt for a perfect property. Any delay can not only mean you miss out on your dream home but could hit you in the pocket too.”

UK locations where homes sell the fastest

Falkirk, Waltham Forest and Bridgend are the three fastest-moving locations.

The top five is completed by Liverpool and Salford, Greater Manchester where homes take an average of 25 days and 26 days to sell respectively.

Sheffield is the fastest-moving market in Yorkshire and the Humber, with homes typically listed for 27 days before they are sold.

* Days on the market rounded to the nearest whole number. Calculated as a rolling six months average from 1st May to 31st October.

Midlands dominates with majority of speediest markets

Markets in the East and West Midlands featured heavily on the list, particularly towns within a 40-minute drive of Birmingham.

Redditch, Worcestershire came in seventh place, with properties there taking an average of just 27 days to sell, followed by Bromsgrove and Walsall, both in the West Midlands, and Stoke-on-Trent in the East Midlands all at 28 days.

Also in the East Midlands, properties in Nottingham spent an average 30 days on the market before finding a buyer, while those in Gedling and Mansfield are on the market for an average of 31 days each.

The fastest-selling borough in London

Only one London borough features in our list of fastest-moving markets, Waltham Forest in East London.

Properties in this borough, which spans Walthamstow, Leytonstone, Highams Park and Chingford, typically sell in 24 days.

In line with London house prices, the fastest moving price band here is £400,000-£450,000, noticeably higher than the other fastest-moving markets in our top 20.

What about the rest of the South?

The South of England hardly features on our list of fastest-moving markets with only two regions outside London ranking.

Bristol is the only location in the South West to feature. It is in 12th place with properties taking an average of 29 days to sell. A two-bedroom terraced house is the fastest moving property type, while when it comes to price band, the speediest is £150,000-£200,000.

Meanwhile, Dartford in Kent is the only South East location to feature (apart from Waltham Forest). Dartford is a firm favourite with London commuters and comes in joint 13th place with average properties taking 30 days to sell. A three-bed terraced house is the fastest moving property type in this region and the fastest moving price band here is higher, coming in at a £250,000-£300,000

What are the fastest-selling property types?

Three-bedroom semi-detached homes were the quickest to sell in 12 of the top 20 fastest-moving markets, followed by two-bedroom terraced homes in five locations and one-bedroom flats in two places.

Cheaper properties also found buyers more quickly, with homes in the £100,000 to £150,000 price bracket leading the way in 11 markets, followed by those in the £150,000 to £200,000 range in five markets.

Waltham Forest and Dartford had the highest price bands for fast sales, followed by Trafford at £200,000 to £250,000.

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by Blackstones

Revealed: the top 10 search terms most used by homehunters in 2020

Our research reveals gardens and garages topped our "Top 10 most-searched terms" lists this year, as coronavirus impacted on what buyers and renters want from their homes.

A garden is what buyers and renters want most in 2020, perhaps reflecting the impact of the Covid-19 pandemic and its associated lockdowns.

Analysis of our property search tool over the past 12 months showed that “garden” was the top feature both buyers and renters were looking for in their new home this year.

“Detached”, “rural” and “secluded” all also made it into the top 10 keywords prospective buyers entered into our search tool in 2020.

Meanwhile, renters were keen to find a property with a “balcony” (fourth on the list), and many were up for finding a rental in the countryside with “rural” featuring in ninth place.

Britons’ preoccupation with their cars was also reflected in our top 10 search terms, with “garage” and “parking” making it into the top three for both buyers and renters.

What are buyers looking for?

The most-searched-for terms give sellers an interesting insight into what potential buyers are really looking for.

“Garden” was the most-searched-for term among those looking to purchase a home, followed by “garage” and “parking”.

“Detached”, “rural” and “secluded” occupied the next three slots, as people looked for properties that would help them to social distance, while balcony took eighth place, as homehunters prioritised having access to outdoor space.

The once unfashionable “bungalow” made it into the top 10 most-searched-for terms for the second year running, coming in seventh place.

An “annexe” was the ninth most-searched-for property feature, possibly reflecting a desire among homehunters to have elderly parents move in with them as a result of the pandemic.

“Freehold” completed the top 10.

What are renters looking for?

For renters, “garden” also took the top spot, while “balcony” was in fourth place and “rural” came ninth.

“Parking” was the second-most-important thing renters looked for in a potential home, followed by a “garage”. “Pets” completed the top five, perhaps reflecting the recent surge in renters who want to find pet-friendly homes.

Having the right flooring was also a priority for renters, as was rent that included household bills and having an ensuite bathroom.

The top 10 also reflected the demand for rental properties among those at university, with “student” the tenth most-searched-for term.

Why is this happening?

The Covid-19 pandemic has triggered a once in a lifetime reassessment of what people want from their homes.

Lockdowns and social distancing have caused people to put a high premium on having access to outdoor space.

Also, with more of us working from home, living in cities or close to good transport links has become less important. As a result, many homehunters are looking towards more rural locations.

This reassessment, combined with the government’s stamp duty holiday, has triggered a mini-housing market boom, with the sales pipeline currently 50% bigger than it was this time last year.

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by Blackstones

Tenants’ charter: social housing residents to be given greater voice to demand safety standards from landlords

Reforms announced by the government will make social housing landlords more accountable and speed up the complaints procedure.

Social housing is set to be reformed to make landlords more accountable and to give tenants a greater voice, according to proposals published by the government.

Prime Minister Boris Johnson has announced plans for a new charter setting out the standards tenants in the sector can demand from their landlords.

“We’re levelling up this country, making it fairer for everyone – and that includes making sure social housing tenants are treated with the respect they deserve,” he wrote in the Social Housing White Paper 2020.

Such standards include living in a property that meets safety standards and is in good repair, and giving tenants the chance to have their voice heard through regular meetings and scrutiny panels with landlords.

In a bid to increase accountability, tenants will also have a right to know how their landlord is performing against a set of tenant satisfaction measures in areas such as repairs, complaints and safety, as well as how money is being spent.

The government also announced plans to speed up the complaints procedure for residents and to strengthen the Regulator of Social Housing and Housing Ombudsman to help drive the cultural change required and ensure complaints are dealt with promptly and fairly.

Housing Secretary Robert Jenrick said: “I want to see social housing tenants empowered by a regulatory regime and a culture of transparency, accountability, decency and service befitting of the best intentions and deep roots of social housing in this country.”

Why is this happening?

The plans are in response to a Conservative party manifesto pledge to provide social housing tenants with greater redress, better regulation and to improve the quality of their homes.

The government is also delivering on a promise it made to the Grenfell community that the voice of tenants would never go unheard again.

A total of 72 people died due to a fire at the Grenfell Tower block in west London in June 2017. The tragedy prompted the government to have a "fundamental rethink" on social housing.

Who does it affect?

Around 4m people live in social housing in England but the safety standards for the sector fall below those required for the private rental sector.

In the past, social housing tenants have also had to wait for several months in order to get complaints resolved, while the regulator has not conducted proactive investigations or inspections but only acted once things have gone wrong.

The new measures should not only increase the safety of social housing, but should also give tenants more opportunities to provide input on the state of their accommodation.

What’s the background?

The government is launching a consultation on making it mandatory to have smoke and carbon monoxide alarms in all rental homes to bring the social housing sector in line with the private rental one.

The government also reaffirmed its commitment to helping social tenants who want to become homeowners to do so through the Right to Buy initiative and its new Right to Shared Ownership scheme for housing association tenants in new grant-funded homes.

Top three takeaways

• Social housing is set to be reformed with a new charter to make landlords more accountable and to give tenants a greater voice

• Under the new standards information will be published showing how landlords are performing in areas such as repairs, complaints and safety to increase accountability

• The government also announced plans to speed up the complaints procedure for residents and strengthen the Regulator of Social Housing and Housing Ombudsman.

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by Blackstones

Covid-19 has changed what Britons value about their homes

The pandemic and lockdown process has made more people appreciate having a study and question the practicality of open plan living, our latest research reveals.

The coronavirus pandemic and lockdown are impacting on how many of us feel about our homes, according to our latest research.

Despite working from home having become the norm for many since the first national lockdown in March, one in five Britons is not happy with their working set up.

Only 23% of those we surveyed have a dedicated study or home office, with 18% working in their living room and a further 14% working in their bedrooms.

A lack of space in which to work was the biggest gripe, with 18% of respondents complaining about being forced to share their workspace with a spouse, family member or housemate. A further 8% complained about a lack of privacy for calls and virtual meetings.

Unsurprisingly, lockdown has also changed people’s attitude towards open plan living, which has grown in popularity in recent years.

Nearly three out of 10 people said their views on open plan layouts had changed, with 11% saying they did not think they were practical in the new normal, while 33% of respondents claimed they never thought they were a good idea in the first place.

By contrast, 17% of those questioned said they now preferred the idea of open plan living, possibly because they are missing the human interaction they previously had at work.

Why is this happening?

Lockdown and the huge rise in the number of people working from home has caused Britons to re-evaluate what they want from their properties.

Features that people did not prioritise when they spent a lot of time away from their home, such as a garden or home office, have gained increased importance among Britons.

Open plan living, which operated well when a property was primarily being used during leisure time, may also have become less appealing when people are working from home for the longer-term.

Tom Parker, consumer spokesperson at Zoopla, said: “Having a home fit for the changes in our lifestyle has never been so important, particularly as many of us work from home.

“For those of us not considering moving home, there’s always scope to improve your current living space, be this painting a room to add a different feel, or zoning a space to create a space for home working.”

Who does it affect?

Despite being dissatisfied with their homeworking arrangement, only 29% of people have spent money on improving their set up, such as buying a new desk or office chair, or upgrading their wi-fi package. A lucky 14% of respondents said their employer covered the cost of improvements.

Others were more positive about working from home, with three out of 10 saying they appreciated not having the hassle and exhaustion of commuting, and 12% appreciated the money they were saving by not having to travel to and from the office.

What’s the background?

With England back in lockdown for another four weeks and other coronavirus restrictions in place in Scotland, Wales and Northern Ireland, many Britons are turning their attention to home improvements.

Upgrading interior decoration is the most popular DIY project people plan to tackle, with 32% of respondents keen to get cracking, followed by garden landscaping (15%) and kitchen renovations at (12%).

One in 10 people plan to create a home office, while 7% aim to improve their wi-fi or phone connectivity.

Fewer homeowners, however, are planning more costly home improvements, with just 5% of our respondents intending to convert their lofts and only 9% thinking of having an extension built.

Top three takeaways

• Covid-19 and lockdown are changing what Britons value about their homes

• One in five are still not happy with their working set up, with only 23% of people having a study or home office

• Nearly three out of 10 people said their views on open plan layouts had changed with 11% saying they did not think they were practical in the new normal.

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by Blackstones

Mortgage choice improves for the first time in 5 months

First-time buyers have been hit by reduced mortgage availability in the wake of Covid-19, but the latest figures reveal an increase in products for borrowers with small deposits.

The number of mortgages on the market has risen for the first time since June, with choice also increasing for borrowers with small deposits.

A total of 2,404 mortgages are currently available - 145 more than in October, according to financial information group Moneyfacts.

The biggest increase was seen in mortgages for people borrowing 75% and 80% of their home’s value, with these tiers accounting for 63% of the rise.

But there was also a glimmer of hope for borrowers with small deposits who have been hit by the withdrawal of high loan-to-value mortgage products in the wake of the Covid-19 pandemic.

The latest data showed a slight improvement in mortgage availability for people with only a 10% deposit, with 56 different mortgages now on offer, up from 51 in October.

Meanwhile, 35 new mortgages were launched for those with a 15% deposit, bringing the total to 344.

But despite the improvement, the number of different mortgages available is still less than half the level seen in November last year.

Why is this happening?

The coronavirus pandemic and the economic uncertainty created by lockdown restrictions has caused lenders to review the level of risk they were prepared to take on.

Many lenders subsequently streamlined their mortgage ranges and withdrew products for borrowers with small deposits.

Despite the reimposition of lockdowns and other Covid-19 restrictions, the recent buoyancy of the housing market, combined with strong mortgage demand, appears to be tempting lenders to launch new products.

Who does it affect?

The increase in mortgage choice is good news for potential buyers as it follows five consecutive months during which lenders reduced their range.

The growth in the number of mortgages available for people with only small deposits is particularly welcome, as this sector of the market was hardest hit when lenders reviewed their ranges earlier this year.

The majority of mortgages for people borrowing 90% of their home’s value are currently being offered by small building societies, such as Penrith, Scottish, The Cumberland, and Teachers Building Societies, and may be restricted to people living in the local area.

Recently, Accord Mortgages released a series of 90% LTV ‘pulse’ deals, available for two days only, for first-time buyers. It’s latest 90% LTV deal, which ran for nine days, was available to all borrowers. Metro Bank recently relaunched its 90% deal too.

 

Meanwhile, start-up lender Generation Home has just launched a new-style mortgage that can be applied for by a group of up to six friends or family members.

The idea is that groups of friends who want to live together could buy a property together, or family members could assist a first-time buyer in getting on to the property ladder.

While the income of different people named on the mortgage application will be included in the calculation for how much can be borrowed, the ‘booster’, as they are known, has the choice of either contributing to regular repayments, or just being on standby in case they are needed.

What’s the background?

While mortgage availability increased in November, average mortgage rates also rose for the fourth month running.

The typical cost of a two-year fixed-rate deal edged ahead by 0.05% to 2.43%, while interest on a five-year one rose by 0.08% to 2.7% - both broadly in line with levels seen in March this year.

Meanwhile, the average time a mortgage product is available before lenders withdraw it dropped to just 28 days, the lowest level since August 2018.

This means borrowers will have to move quickly to apply for a mortgage after identifying a suitable product, as they are likely to have only a small window of time before it is withdrawn.

Top three takeaways

• The number of mortgages available has increased for the first time since June
• A total of 2,404 mortgages are now available - 145 more than in October
• The biggest increase was mortgages for people borrowing 75% and 80% of their home’s value.

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by Blackstones

Rents dropped 5% in London, but the rest of the UK showed 1.7% rental growth in 2020

Rents outside London have grown this year but they’ve dropped in the capital as Covid-19 creates a two-speed market, according to our latest Rental Market Report.

With England now in the grip of a second lockdown and restrictions in place across the rest of the UK, our latest Rental Market Report reveals Covid-19 has led to a two-speed market.

Our report shows that despite challenges caused by the impact of the pandemic in 2020, the wider UK rental market (excluding London) is resilient and has shown 1.7% annual growth in rents.

Average rents in London, however, have fallen by 5.2% over the last 12 months, reaching levels last seen in 2014.

What does the two-speed market mean?

Average UK rents outside London climbed by 0.7% in the three months to September, taking the annual growth rate to 1.7%.

Our report reveals a positive picture across most cities. Belfast and Newcastle both recorded annual rental growth of 3.5%, followed by Bristol at 3.1%. Sheffield and Glasgow followed closely behind.

However, London sits at the other end of the spectrum, with rents falling by 3.2% over the last quarter to September. It’ll take the annual fall to 5.2% by the end of December.

This two-speed market is set to be entrenched during the second lockdown in England which started in early November and is due to lift on 2 December - although an extension hasn’t been ruled out. Scotland has a five-tier restriction system in place and Wales recently emerged from a two-week “firebreak” lockdown.

What is driving rental growth?

A mismatch between tenant demand and the number of rental homes on the market is underpinning rental growth.

While renter appetite to move home has levelled off since early summer when the first lockdown ended, it’s still 20% higher than this time last year.

Stricter lending as a result of the pandemic is forcing many aspiring first-time buyers to put their home-ownership plans on hold and remain in the rental market for longer, supporting overall demand.

With universities remaining open despite the impact of Covid-19, the annual influx of students to college in the autumn will also have boosted rental demand.

Against this backdrop, the number of homes available to rent has been constrained, with investment levels dropping since the 3% stamp duty surcharge was introduced in 2016 for those buying an additional home.

What’s the regional picture like?

The strongest rental growth is in the North East, where annual rental growth is up 3.2% in the year to September.

In the North East, rental demand was 54% higher in the three months to September than the average in previous years, while supply is down 9% compared to the typical levels seen in the same three months over the past three years.

Rental growth is in positive territory in all other UK regions outside London, except Scotland and the West Midlands which have other factors affecting the dynamics of the market.

In Edinburgh, a 1.6% annual fall in rents reflects muted tourism and the shift from short-lets to long-lets, while the Aberdeen market has been affected by the North Sea energy industry.

Manchester and Birmingham have just dipped into negative territory, at -0.1% and -0.5% respectively. There are larger annual rental declines in Coventry (down 2.5%) and Reading (down 1.8%) as some cities are hit by the impact of people working from home.

What about London?

The pandemic has had a major impact on London’s rental market, with rental falls reflecting changing work and commute patterns as well as muted tourism.

Like any housing market, London’s is very localised.

The move towards working from home has particularly hit central London, where rental properties normally used by workers for part of the week are coming back to the market.

On top of this, restricted tourism during the summer and autumn has impacted the short-term rental market, with many landlords now offering long-term rentals instead.

However, rental demand is stronger in outer London boroughs where rentals tend to offer more space for the money and are more likely to come with gardens.

What impact has the first lockdown had?

The first lockdown led many renters, just like buyers, to reassess their home and lifestyle. As a result, rented houses are now being snapped up more quickly than flats in some areas. This suggests, perhaps unsurprisingly, additional space, often with a garden, is becoming more important to home-movers.

This trend is reflected in our data, which reveals that the most popular search terms are:

• gardens

• parking

• garage

• balcony

• pets.

The timeline of renting a property has also shortened. The time it takes to rent a house and a flat in the UK, on average, is 16 days and 18 days respectively. This is down from 20 days last year for both types of property.

What’s the outlook for the months ahead?

The two-speed rental market in the UK is here to stay for the coming months, with restrictions set to exacerbate some of the trends that have emerged from previous lockdowns.

And moving into next year, the supply of rental homes in large cities could catch up with demand, limiting the scope for further rental growth.

However, earnings growth is expected to pick up again in 2021, which could pave the way for rents to increase, especially if office working becomes the norm again.

Head of research here said: "The split in the rental market caused by Covid-19 has now crystallised and we are seeing the two-speed market firmly entrenched.

"For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth. We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents.

"At the same time, however, muted earnings growth will start to limit the headroom for rental growth in some markets.”

"The search for additional space, both indoor and outdoor,  within the rental sector is also set to continue as the country goes through additional periods of lockdown."

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by Blackstones

Mortgage approvals soared to a 13-year high in September

The stamp duty holiday is continuing to drive high levels of buyer demand. But with England in lockdown again, will this trend continue?

Mortgage approvals for house purchases soared to a 13-year high in September as the rush to buy a home in time to benefit from the stamp duty holiday continued.

A total of 91,500 mortgages were given the green light in September, the highest level since September 2007.

The numbers edged well above August’s tally of 84,700 approvals.

The stampede to buy homes is being driven by a combination of the government’s stamp duty holiday and people reassessing their housing needs following the first coronavirus lockdown.

The high level of demand is reflected in our latest house price index, which found that the pipeline for sales was 53% bigger in October than during the same month last year.

Why is this happening?

September is traditionally a busy month as the property market enjoys an autumn bounce, but in 2020 it has shown higher activity than usual.

The strong level of pipeline sales in part reflects demand that built up during the first national lockdown continuing to work its way through the system, while activity is also being driven by the stamp duty holiday on homes costing up to £500,000.

In addition, the pandemic has caused people to reassess their housing needs, particularly with the threat of further lockdowns looming, creates additional demand.

Who does it affect?

With the stamp duty holiday due to end on March 31, buyers who want to take advantage of it need to start house hunting straight away.

It typically takes around 100 days from an offer being accepted to a transaction being legally completed.

But the current high volume of sales going through is expected to create delays in the conveyancing process, while national lockdowns such as the ones currently imposed on England and Wales could slow things down further.

We estimate that only 54% of sales agreed in January will have completed by the end of March, compared with 92% of those agreed in November.

At the same time, the number of mortgage products available has halved during the past year, with just a handful of deals remaining for people with a 5% deposit and only around 50 for those with a 10% one, according to Moneyfacts.

It is not only those borrowing a high proportion of the value of their homes that are being hit, with mortgage choice falling in all but two loan-to-value brackets, including the 60% one.

There are also reports of a rise in applications being rejected, particularly for first-time buyers, as lenders become more risk-averse.

Finally, the high levels of demand mean buyers face increased competition for homes that are on the market, with many people chasing properties with the same features, such as large gardens.

What’s the background?

Going forward, buyer appetite in some areas is expected to begin to slow down as the recession and rising unemployment take their toll.

Richard Donnell, our research and insight director, said: “The strength of the market nationally is masking weakness in parts of the market where sales are slowing in areas where households are typically on lower incomes and more sensitive to economic uncertainty and more restricted credit availability.

“This market polarisation is set to become a growing feature of the market as we move in 2021.”

Top three takeaways

• Mortgage approvals for house purchase soared to a 13-year high in September as the rush to buy a home continued

• A total of 91,500 mortgages got the green light during the month, the highest level since September 2007

• The stampede to buy homes is being driven by a combination of the government’s stamp duty holiday and people reassessing their housing needs following coronavirus lockdowns.

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by Blackstones