Mortgage lenders told to do more to help struggling borrowers
The Financial Conduct Authority has called on lenders to work harder to understand the cost of living problems people are facing. And to ensure they are offered the right support.
Mortgage lenders have been told to do more to help customers who are struggling with repayments in the face of rising interest rates.
Regulator the Financial Conduct Authority (FCA) has written to more than 3,500 lenders calling on them to take the time to understand individual customers’ circumstances and offer tailored solutions.
It warned that lenders should also only charge fees that are fair and cover their own costs.
In addition, the FCA said they should encourage mortgage customers to switch to less costly options where these were available, as well as helping them to access free debt advice.
The call was directed at all types of lenders, including those who offer mortgages, credit cards and loans.
Sheldon Mills, executive director of consumers and competition at the FCA, said: “Many consumers are feeling the impact of the rising cost of living in their personal finances and we expect this to increase over the next few months.
“Early action is important for those struggling with debt. We need all firms to get the basics right and provide good quality support.”
The letter comes as the Bank of England increased interest rates for the fifth consecutive time, raising the official cost of borrowing to a 13-year high of 1.25%.
Interest rates rise to a 13-year high
The move means two million homeowners on variable rate mortgages will see their monthly repayments rise by a cumulative £114 a month since interest rates first began to increase in December.
Why is this happening?
The FCA said they had looked into how borrowers in financial difficulties were being treated by lenders.
They found that some lenders were not providing the right support.
The FCA was particularly concerned that the most vulnerable customers were not being given the right advice.
It pointed out that with household bills expected to continue to rise into the autumn, it was important that firms put measures in place to ensure they were offering the best help to struggling customers.
What should I do if I’m struggling?
The regulator urged borrowers who were struggling to talk to their lender as soon as they can.
The FCA said lenders must offer a range of short-term and long-term options to mortgage customers who were facing difficulties.
These include:
- extending the mortgage term to make monthly repayments more affordable
- changing the mortgage type, such as converting from a repayment mortgage to an interest-only one
- offering a payment holiday, to give customers breathing room to get their payments back on track
But it stressed that this list was not exhaustive, and lenders should consider other options under appropriate circumstances.
What’s the background?
Despite the pressures households face from the rising cost of living, it should not impact the amount mortgage customers can borrow, according to research carried out by mortgage trade body UK Finance.
It found that while rising prices had led to homeowners facing a 3% reduction in their disposable income, they would still qualify for the same sized mortgage now as they did last year.
The finding is good news for borrowers, as they face strict affordability tests which look at their day-to-day outgoings when they take out a mortgage.
It suggests that people looking to remortgage should still be able to borrow the same amounts as they could before the cost of living hike.
Key takeaways
- Mortgage lenders have been told to do more to help customers who are struggling with their repayments
- The regulator, the Financial Conduct Authority, has told lenders to take the time to understand individual customers’ circumstances and to offer tailored solutions
- Lenders should also only charge fees that are fair and cover their own costs
Interest rates rise to a 13-year high
Nearly two million homeowners will face higher mortgage repayments after the Bank of England increased interest rates for the fifth consecutive time.
The Bank of England has increased interest rates for the fifth consecutive time, lifting the official cost of borrowing to a 13-year high.
Its Monetary Policy Committee increased the Bank Rate from 1% to 1.25% as it continues to battle the rising cost of living.
Three members of the committee voted to raise interest rates by an even more aggressive 0.5%, suggesting there will still be further increases to come.
The move means around two million homeowners with variable rate mortgages will see their monthly mortgage repayments rise.
The latest increase will add around £24 a month to a £200,000 mortgage, bringing the cumulative increase since rates first started to rise to £114 a month.
It comes at a time when consumers are already suffering from steep increases in food, petrol and energy costs.
Why is this happening?
Like many central banks around the world, the Bank of England is increasing interest rates in a bid to control inflation, which measures rises to the cost of living.
Inflation as measured by the Consumer Prices Index is currently running at 9%, its highest level for 40 years, and it is expected to hit 11% later this year.
To put this in context, the Bank of England is supposed to keep inflation at around 2%.
High inflation is currently a global problem due to a combination of high energy and fuel prices, which impact the cost of goods, disruption to the supply chain caused by Covid-19 and the conflict in Ukraine.
Who does it affect?
Not everyone will be impacted by the latest increase.
Nearly three-quarters of homeowners have a fixed rate mortgage, and they will not see any change to their monthly repayments until their current deal ends.
But the news is less good for those with a variable rate mortgage.
Around 850,000 people are currently on a tracker mortgage, with a further 1.1 million on a standard variable rate one.
These homeowners will see their monthly repayments increase by around £24 a month if they have a £200,000 mortgage, adding to the previous increases they have already seen since December.
What should I do now?
If you are coming to the end of a fixed rate mortgage, start looking for a new deal now.
Although the interest rate rises seen since December will already have been priced into new deals, further increases are expected in the months ahead.
You can ‘book’ a mortgage offer up to six months in advance of your current deal ending.
With rates only heading in one direction, try to line up a new deal as soon as possible.
You should also look for a new mortgage of you are currently on your lender’s standard variable rate.
The average interest rate charged on standard variable rates is currently 4.91%, meaning you could save £189 a month if you switch to a typical two-year fixed rate product of 3.25%, based on a £200,000 mortgage.
If you are on a tracker deal, which moves up and down in line with changes to the Bank Rate, it may not be possible to remortgage without paying early redemption penalties.
Check with your lender to find out if this is the case. If you can exit your current deal without penalties, you may want to consider remortgaging onto a fixed rate deal to protect yourself from further interest rate rises.
Economists are predicting the Bank Rate could rise to 3% next year.
If you are struggling to pay your mortgage, contact your lender as soon as possible.
There are a number of steps they can take to help you, including giving you a temporary payment holiday or putting you on to an interest-only mortgage for a short time.
But options become more limited if you have already missed a payment.
Key takeaways
- The Bank of England has increased interest rates five times in a row, lifting the official cost of borrowing to a 13-year high
- Yesterday, the Bank Rate increased from 1% to 1.25% , increasing monthly repayments by around £24 a month for someone with a £200,000 mortgage
- If you're on a standard variable rate or tracker mortgage, it's a good idea to fix now, as interest rates are likely to go up again over the coming months
New-build buyers driving the green home movement – and saving up to 52% on energy costs
Climate change and the cost of living are making energy efficiency a priority for new-build buyers, but many people underestimate how much money you can save with a greener home.
New research shows that the cost of living and climate change are creating new priorities for home buyers.
This is particularly the case for new-build buyers, who are prioritising energy efficiency in their buying decision.
And while new-build buyers are driving the green home movement, almost half of buyers of older homes still see energy efficiency as important.
High EPC ratings top of the wishlist for new-build buyers
Energy efficiency is now a high priority for those who bought or intend to buy a new-build home.
More than two-thirds of new-build buyers (69%) said EPC ratings were either extremely or very important to them.
The energy efficiency of new-builds is a growing attraction for buyers. More than 80% of new-builds have an energy efficiency rating of A or B, compared to just 3% of older homes.
“Rising energy costs and greater awareness of climate change are starting to have greater influence on home buying decisions,” said Richard Donnell, Research Director at Zoopla.
“The energy efficiency of new homes and the lower running costs is a recognised attraction for would-be buyers compared to those looking for a home in the resale market.”
You can save up to 52% on your energy bills with a new-build home
We’ve taken a look at the government’s EPC data, and you can save a huge amount by moving to a home with a higher EPC rating.
New-builds offer up to 52% lower running costs over a year compared to a similar-sized older property.
The average carbon output of a new home also comes in at under a third of that from an older home (1.4 tonnes vs 3.8 tonnes per year).
Other research has found similar energy savings for new-build owners.
New-build owners save an average of £629 a year on energy bills, according to the Homes Builders Federation.
But lots of people don’t realise how much you can save by moving to a new-build home.
When asked to estimate how much money a new-build could save you on energy bills over a year, 6 in 10 respondents thought it would be less than 52%.
And a third of people thought you’d only save 20% on energy bills in a new-build compared to a similar older home.
Buyers care about the environmental impact of building a new home
New-build buyers are also conscious of the environmental impact of building a new home.
Three quarters (74%) of new home buyers said it was important that their home is built with minimal impact on the environment.
What’s next in the green home movement?
This is just the start of decarbonising the housing market and reducing emissions from UK homes.
The introduction of new government regulations has seen an increase in the energy efficiency requirements of new homes.
The Future Homes and Buildings Standard ensures that new homes built from 2025 will produce 75-80% less carbon emissions than those delivered under current regulations.
This will mean massive energy savings for homeowners.
While buyers of older homes are less concerned about the energy efficiency of their home at the moment, 2 in 5 (41%) still said it's important to them.
“We expect the importance of energy efficiency to increase further as the Government continues to roll out further policies," said Richard Donnell.
“The new homes market and the private rented sector are the big focus areas for policymakers at present.”
“Rising energy costs will only serve to increase the importance of energy efficiency and running costs of homes as part of home moving decisions.”
Surveyed 2,615 people between 28 February 2022 and 10 March 2022. Respondents had either bought a home in the last 18 months or intend to buy one over the next 18 months.
Key takeaways
- Rising living costs and growing climate change concerns are creating new priorities for home buyers
- Nearly 70% of new-build buyers say energy efficiency is an extremely or very important factor in their home
- New-builds can save you 52% on energy costs over a year – but most people think it’s less
Extra protection and powers for renters announced in Renters Reform Bill
Changes will protect renters from rent rises, ensure homes are fit to live in and make it easier to have a pet.
Renters are set to be protected from unfair rent increases as part of a package of reforms to improve the private rented sector.
New rules being introduced will also end ‘no fault’ evictions, while all rental homes will have to meet minimum standards, the government said.
Other changes include making it illegal for landlords to have blanket bans on families with children or people receiving benefits, and it will also be easier for renters to have pets.
The government claims the measures, which will be included in the Renters Reform Bill to be introduced during the current parliamentary session, are the biggest shake up for the private rented sector for 30 years.
Richard Donnell, Executive Director of Research and Insight at Zoopla, said: “With the backdrop of the cost of living crisis putting pressure on renters, these reforms are welcome and timely, particularly as they’re largely focused on boosting the quality of housing in the rented sector.
“The private rented sector plays an important role in the housing market, providing much needed homes for a wide spectrum of households. These reforms mark another milestone in the journey to create a suitable equilibrium between renters and private landlords who provide the majority of homes for rent.”
What will change?
Under the new rules, arbitrary rent review clauses will be outlawed, and notice periods for rent increases will be doubled. Renters will also have stronger powers to challenge rent rises if they think they are unjustified.
To ensure all private rented properties are fit for occupation, the Decent Homes Standard will be extended to cover the sector for the first time.
If homes fall below this standard, people will have their rent repaid. Councils will also have stronger powers to tackle rogue landlords, including larger fines for serious offences.
Going forward, all renters will be moved into a single system of ‘periodic tenancies’, enabling them to leave poor quality housing without remaining liable for the rent, and making it easier for people to move if their circumstances change.
Section 21 ‘no fault’ evictions will also be banned, meaning tenancies will only end if a renter wants them to, or the landlord has a valid reason, defined in law, to do so.
Meanwhile, all renters will have the right to ask to have a pet in their home, and their landlord must consider their request and cannot unreasonably refuse it.
A new Private Renters’ Ombudsman will also be created to settle disputes between renters and landlords quickly and at a low cost, while renters will be able to demand information on their landlord and rate them.
Why is this happening?
The government claims the measures will help to redress the balance between landlords and the 4.4 million people who rent homes in the private sector.
While the majority of renters have safe homes, the government wants to help the 21% of people who rent in the private sector have properties that are deemed to be unfit, more than half of which pose a risk to renters’ health and safety.
It also wants to protect renters from ‘no fault’ evictions, after research showed more than a fifth of private renters who moved in 2019 and 2020 did not do so by choice.
Who does it affect?
The move is great news if you rent in the private sector, as it offers you greater certainty over how long you can live in your home and how much it will cost you.
You also have the reassurance that your home will meet minimum standards and that you have an easy route to take action if disputes occur between you and your landlord.
But there are concerns that the measures could lead to more landlords exiting the sector.
A growing number of amateur, private landlords have sold their properties in recent years as a result of tax hikes and increased regulation, which have made the market less profitable.
This trend has led to a growing mismatch between supply and demand, forcing rents higher.
Donnell said: “There is a delicate balance to ensure reforms don’t compound these supply-side challenges, which continue to keep an upward pressure on rents.
"Rents have risen 11% in the last year. Ensuring decent homes is paramount but so is the investment into this important sector of the housing market.”
Key takeaways
- Renters are set to be protected from unfair rent increases as part of a package of reforms to improve the private rented sector
- ‘No fault’ evictions will be banned, and homes will have to meet minimum standards
- It will be illegal for landlords to refuse families with children or people receiving benefits, while it will also be easier for renters to have pets
2.5 million renters to benefit as Right to Buy is extended to housing association homes
As the government announces plans to help first-time buyers access low-cost mortgages, while those on housing benefit can use it towards their mortgage repayments.
More than 2.5 million people are set to benefit from government plans to extend the Right to Buy scheme to housing association homes.
The announcement was part of a package of measures to make it easier for first-time buyers to step onto the housing ladder.
Other changes include allowing people to put housing benefit towards mortgage repayments, while money saved in Lifetime ISAs for a housing deposit will be excluded from benefits calculations.
Prime Minister Boris Johnson also announced plans for an independent review of the mortgage market to improve access to low-cost mortgages for first-time buyers with 5% deposits.
Johnson pointed out that more than 50% of people who currently rent could afford to make monthly mortgage repayments, but strict mortgage lending restrictions and high deposit requirements meant only 6% could access a typical first-time buyer mortgage.
He said: “We have a ludicrous situation whereby plenty of younger people could afford to make monthly mortgage payments – they’re earning enough to cover astronomical rent bills – but the ever-spiralling price of a house or flat has so inflated deposit requirements that saving even just 10% is a wholly unrealistic proposition for them. We want it to be easier to get a mortgage.”
Why is this happening?
Under current rules, people who live in council houses are able to buy their home at a discount of up to 70% of its market value, depending on how long they have lived there.
But the scheme is less generous for those who rent from a housing association. The government now wants to change this.
It is also looking to remove some of the barriers that prevent people who could afford a mortgage from taking one out, as well as addressing issues in the benefits system that prevent people from becoming homeowners.
Who does it affect?
The measures are great news for aspiring first-time buyers as it increases their chances of becoming homeowners.
More than two million people have purchased their council home through Right to Buy since it was first launched in the 1980s.
Meanwhile, it has long been a complaint of first-time buyers that mortgage repayments are considered to be unaffordable for them by lenders, even though they currently pay more each month in rent.
What are the details?
Full details on how Right to Buy will operate for housing association renters are not yet available, with the government saying it will work closely with the sector on the design of the scheme.
But it has committed to building new social housing homes to replace each one that is sold, to ensure the number of homes available to rent does not reduce.
The government also hopes to help more people to become homeowners by letting them use housing benefit towards mortgage repayments.
Around 1.5 million people who are in work receive housing benefit but at present it can only be used to pay rent to housing associations or private landlords.
It also plans to amend the rules for Universal Credit to enable people claiming the benefit to save for a housing deposit.
Under current rules the amount of money people receive is reduced if they have savings of more than £6,000, while they receive nothing if they have more than £16,000 in the bank.
The government plans to exempt money saved in Lifetime ISAs from this assessment, enabling recipients to save for a deposit without losing any benefits.
People can save up to £4,000 a year in a Lifetime ISA, to which the government then adds a 25% bonus - up to a maximum of £1,000 annually - for free.
The money must be used to either purchase a first home or for retirement.
Key takeaways
- More than 2.5 million people are set to benefit from government plans to extend the Right to Buy scheme to housing association homes
- People will also be able to put housing benefit towards a mortgage, while money saved in a Lifetime ISA towards a housing deposit will be excluded from benefits calculations
- Furthermore, a review of the mortgage market will be carried out to improve access to low-cost mortgages for first-time buyers with small deposits
Every household in the UK to see £400 cut from their energy bills
Government gives £15 billion to help households cope with cost of living hike, with extra cash for those who are most vulnerable.
The government has unveiled a £15 billion giveaway to help Britons cope with the rising cost of living.
All households will see their energy bills cut by £400, with those on the lowest incomes receiving at least £1,200 in additional support.
The initiative will be paid for through a windfall tax on the “extraordinary” profits being made by oil and gas companies.
Chancellor Rishi Sunak said: “We are raising emergency funds to help millions of the most vulnerable families who are struggling right now.
“All households will benefit from universal support for energy bills of £400 – with not a penny to repay.”
Alongside the action we’ve already taken this year today's measures will ensure:
The vast majority of households receive £550.
Pensioners receive £850.
And almost all of the eight million most vulnerable households will receive support of at least £1,200.
What support is available?
The Chancellor is doubling the help available through the Energy Bills Support Scheme from £200 to £400.
He is also changing the support scheme from a loan that people would have to pay back, to a grant – meaning it does not have to be repaid.
Households will also benefit from the previously announced £150 council tax rebate for homes in England that sit within bands A to D.
As a result, they will be £550 better off overall than before the measures were announced.
What about help for the most vulnerable?
In addition to the Energy Bills Support Scheme, there is also extra help for the most vulnerable.
Low-income households
Around 8 million households on the lowest incomes will receive a one-off Cost of Living Payment of £650.
The money will be given in two payments, the first from July and the second in the autumn. It will be sent straight to the bank accounts of people on means-tested benefits without the need to claim it.
Pensioners
Pensioners are set to receive a one-off Pensioner Cost of Living Payment of £300.
The cash will help more than eight million households who receive the Winter Fuel Payment. They will receive the money in the autumn.
People with disabilities
An estimated 6 million people who receive means-tested disability benefits will be given a one-off Disability Cost of Living Payment of £150 in September.
Many of these people will also receive the £650 Cost of Living Payment for low-income households, bringing the total value of support to £800.
To help people who do not fall into the above categories, the government is also putting an extra £500 million into the Household Support Fund from October.
The fund enables local councils in England to help those most in need with payments towards the cost of food, energy and water bills.
Why is this happening?
Inflation - which measures the rate at which the cost of things increases – is currently running at a 40-year high of 9%.
A combination of supply chain disruption caused by the Covid-19 pandemic, staff shortages in some sectors, and the war in Ukraine have pushed up the price of goods.
Energy bills are one of the areas in which people have been hardest hit, with regulator Ofgem announcing a 54% increase in the energy price cap in April, and recently warning that it is set to rise again in October to stand at £2,800.
How will the support be paid for?
The giveaway will be financed through a new windfall tax on energy companies, known as the Energy Profits Levy, which is expected to raise £5 billion.
It will see the profits made by oil and gas companies taxed at a rate of 25%. Profits made by the sector have surged as a result of soaring energy prices as a result of the conflict in Ukraine.
The tax is temporary and will be phased out once oil and gas prices return to normal levels.
How will it affect the housing market?
The support, while welcome, only goes some way to offset the increase in energy bills people face.
The average household will have seen the cost of their gas and electricity bills increase by nearly £1,200 this year.
This hike comes at a time when higher interest rates are leading to more expensive mortgage repayments and the cost of food is also increasing.
The rising cost of living that households face is expected to slow activity in the housing market during the second half of the year.
But house prices are not expected to fall, as lenders have previously factored higher mortgage and other costs into their affordability criteria.
They are also working closely with borrowers who are struggling to make repayments, to find a solution that enables them to stay in their home.
We expect house price growth to slow down during the year, with property values ending 2022 around 3% higher than they started it.
Key takeaways
- The government has unveiled a £15 billion giveaway to help Brits cope with the rising cost of living
- All households will see their energy bills cut by £400
- Low-income households, pensioners and people with disabilities will receive up to £800 of additional support
More than 350,000 households take up the Help to Buy scheme
Government lends £22 billion to help to help more than 350,000 households purchase a new home with Help to Buy scheme.
The government has advanced more than £22 billion to help people buy a home through the Help to Buy equity loan scheme.
A total of 355,634 households in England have bought properties, collectively valued at £99 billion, since the initiative was first launched in April 2013.
Nearly 9,000 first-time buyers used Help to Buy to get on to the property ladder during the final three months of 2021 alone.
The scheme enables people to purchase a new-build property with just a 5% deposit, which the government tops up with a 20% equity loan, rising to 40% in London.
The loan is interest-free for the first five years.
The initiative was initially open to all buyers, but it was restricted to people purchasing their first home in April 2021, when regional price caps on the properties that could be bought were also introduced.
First-time buyers who want to take advantage of the scheme have until the end of March 2023 before it closes.
What impact have the changes had?
The number of properties bought through the Help to Buy scheme were 40% lower in the final three months of 2021, compared with the same period of the previous year.
The drop is due to the fact that the scheme is now restricted to first-time buyers only.
The government introduced this rule, along with regional price caps, to ensure the money went to those who would struggle to buy a home on their own.
The average value of properties bought through the scheme has fallen in all regions, apart from London, since the new version of the scheme was introduced.
This is likely to be due in part to the regional price caps, which range from £186,100 in the North East, to £437,600 in the South East.
The maximum value of a home that could be bought through the scheme remained unchanged at £600,000 in London.
At the same time, limiting Help to Buy to first-time buyers will also have impacted the average value of property purchased, due to the fact that this group typically buy lower value homes.
The average household income of buyers using the scheme has also fallen in all regions since the changes were made, as has the average size of the deposit they put down.
The figures suggest the changes to the scheme have been successful in targeting it to those who most need help purchasing a property.
What type of homes are being bought?
Since the new version of the Help to Buy scheme was introduced, there has been a steep fall in the number of detached properties being purchased.
Only 14% of homes bought with the current scheme were detached, down from 32% under the previous version.
Instead, there has been a rise in more typical first-time buyer properties, with 29% of people using the scheme buying flats, up from 18% previously, while 42% bought semi-detached homes, compared with 32% before the changes were introduced.
The exception is London, where the vast majority of properties purchased through the scheme continue to be flats.
Only 8% of properties bought through Help to Buy in all regions have four or more bedrooms, compared with 28% previously, while a third have two-bedrooms, up from 22%.
What other schemes are there?
The Help to Buy equity loan is one of a number of government schemes to help people get on to the property ladder.
Both first-time buyers and home-movers who only have a 5% deposit can also use the 95% mortgage guarantee scheme.
Other initiatives include First Homes, under which first-time buyers, key workers and local people can purchase a home at a 30% discount to its market price.
And there's also Shared Ownership, which enables people to buy a share in a property and pay rent on the rest.
First-time buyers saving for a deposit can also use the Lifetime ISA, under which you can save £4,000 a year. The government then adds a 25% bonus - up to a maximum of £1,000 annually - for free.
The money must be used to either purchase a first home or for retirement.
First-time buyers are also exempt from stamp duty on the first £300,000 of a home purchase on properties costing up to £500,000.
Key takeaways
- The government has loaned more than £22 billion to help people buy a home through Help to Buy
- 355,634 households in England have bought properties through scheme, collectively valued at £99 billion
- First-time buyers have until the end of March 2023 to take advantage of Help to Buy before it closes
Number of new homes under construction soars by 31%
More than 35,000 new-build homes are under way, including wildlife-friendly garden community homes. And if you fancy renting a new-build, there’s good news too.
The number of new homes going up has soared by 31% as developers respond to strong demand from buyers.
More than 35,000 new private sector homes were registered during the first three months of this year, almost a third more than in the same period of 2021.
The increase is good news for first-time buyers who might want to use the Help to Buy equity loan scheme to get on the property ladder.
Figures were up for all property types, but the number of detached homes under construction has now soard to a 20-year high, according to the National House Building Council, which provides warranties on new-build homes.
The NHBC said housebuilders were responding to demand from buyers who want more space following the Covid-19 pandemic, particularly those who now work from home.
And there’s also good news for renters.
Nearly 11,000 Build to Rent and affordable properties began construction in the last three months, that’s 10% more than the same period in 2021.
Build to Rent provides homes that are designed and managed specifically for renters.
They often come with a range of high-end facilities, such as gyms, cinemas, communal chill-out zones, gardens, and concierge services, which are often all included in the rent.
What type of new homes are being built?
Developers are responding to consumer demand for more space following the pandemic, with the number of detached homes being built rising by 29% year-on-year.
Semi-detached homes were the second most common type of property, with 13,889 started during the three months, 24% more than during the same period of the previous year.
At the other end of the scale, only 630 new bungalows are being built, while the number of new terraced houses rose by just 4%.
Where are the properties being built?
Four regions of the UK saw a jump of more than 50% in the number of new-build homes going up.
Wales led the way with an 84% increase, followed by the East Midlands at 65%.
The West Midlands and London saw increases of 52% and 51% respectively.
The South East has the highest number of new builds under construction at 8,279.
The East Midlands is next with 5,430, while London is in third place with 4,722.
Scotland, Northern Ireland and the East of England were the only regions that saw a decrease in the number of new homes being built.
Even so, in the last three months 4,814 new properties started going up in the East.
What does it mean for me?
The rise in new build numbers is great news for first-time buyers who want to use the Help to Buy equity loan scheme to get on to the property ladder.
The scheme enables people to purchase a new-build home with just a 5% deposit, which the government then tops up with a 20% equity loan that’s interest-free for five years.
Those who want to use the scheme have until March 2023 to do so.
Meanwhile, First Homes offers discounts of between 30% and 50% on new-build properties to local first-time buyers and key workers.
The scheme is still at an early stage, but 1,500 homes should be made available through it in the coming two years.
The figures are also good news for families who want to trade up the property ladder to get more space, as developers are clearly responding to consumer demand in this area.
Alongside the Help to Buy scheme, many developers offer their own incentives, such as help with deposits for people buying certain plots, paying a buyer’s stamp duty and discounts for those in the armed forces.
Some will even buy your existing home from you.
The creation of new homes in garden communities
The government has also just announced an additional £15 million of funding to support the delivery of thousands of new homes in garden communities across England.
Garden communities are part of a government initiative to deliver 16,000 new homes a year from 2025, with green, wildlife friendly spaces at the heart of the developments.
Examples include plans to develop a disused airfield in Long Marston in Warwickshire into a green neighbourhood with 3,500 new homes, 35% of which will be affordable housing.
Meanwhile, Halsnead Garden Village in Knowsley will deliver 1,619 new homes and a country park, which will include wetlands and a restored wildflower meadow.
Overall, 43 new green towns and villages will be created across England, generally on undeveloped or brownfield land.
The developments will have to follow mandatory design codes and builders will need to respect the designs, layouts and building materials favoured by local people in their plans.
A total of £69 million will be spent on the programme, which is forecast to support nearly 200,000 jobs in the local schools, shops and offices within the new communities.
Key takeaways
- The number of new homes going up has risen by a third in the last three months, as builders respond to strong demand from buyers
- Love the idea of a new home in a green, wildlife-friendly space? Keep an eye out for a garden community development coming near you
- And in good news for renters, the number of Build to Rent and affordable properties being developed has increased by 10%
Free money to make your home more energy efficient
There are several home improvement schemes available that'll give you money to reduce your energy bills. Let's take a look.
With gas and electricity bills soaring, you may be looking for ways to cut back on your energy usage. Making your home more energy efficient is the first obvious way to reduce costs.
The good news is that there are a number of government grants available to help you do just that.
Let's take a look at the different schemes available to help you improve your home and reduce your energy bills.
Free loft and cavity wall insulation
With a quarter of heat lost through the roof of your home, installing loft insulation can be an effective way of reducing your energy bills.
In fact, new loft insulation could save you nearly £600 a year if you live in a detached home, according to the Energy Saving Trust.
Installing loft insulation costs around £400, including labour. For cavity wall insulation, you can expect to pay around £200 per two-storey external wall.
But you may be able to have the work carried out for free under the Energy Company Obligation scheme.
Energy companies have an obligation to help low income households make heating improvements to their homes.
Under the scheme, you can get loft or cavity wall insulation installed, as long as it's suitable for your home.
You may also be able to get window glazing or a new boiler if your current one has broken.
Different energy companies offer different options under the scheme. The level of funding they provide also varies.
You are eligible for the scheme if you or someone living with you is claiming certain benefits. These include universal credit, pension credit, income support, disability living allowance, child tax credit, and child benefit.
You can apply for the scheme if you're a homeowner or renting a property, as long as you have permission from your landlord.
Boiler upgrades
A new, more energy efficient boiler can help to slash your fuel bills by up to a third.
But replacing your boiler can be pricey, particularly if you upgrade to a low carbon one. A small biomass boiler for example, starts at £5,000.
That said, government grants are available to help you replace fossil fuel heating systems with more efficient, low carbon ones.
The Boiler Upgrade Scheme offers property owners £5,000 towards the cost of buying and installing an air source heat pump or biomass boiler.
Alternatively, you can get £6,000 off the cost of a ground source heat pump.
To qualify, your home must be in England or Wales. You must also have a valid energy performance certificate. In addition, there must be no outstanding recommendations for loft or cavity wall insulation.
New build properties are not normally eligible. And your existing system must run off oil, gas or electricity.
The grant can only be used to for a biomass boiler if you live in a rural area and are not connected to the gas grid.
Green Homes Grant
The Green Homes Grant was a government scheme under which homeowners could get vouchers worth up to £5,000. The money covered up to two-thirds of the cost of improvements to make your home more energy-efficient.
If someone in the household received certain benefits, 100% of the cost up to £10,000 was covered.
The scheme officially closed to new applicants on 31 March 2021. But local authorities in England are still running their own versions of it. These are known as the Green Homes Grant Local Authority Delivery Scheme.
Under the new scheme, grants averaging £10,000 are available to homeowners. The money can be used to install solar PVs, air source heat pumps, and loft, underfloor, external wall and cavity wall insulation.
Homeowners do not need to contribute any money themselves towards the improvements.
To qualify, you must have a household income of less than £30,000 a year. Your property must also have an Energy Performance Certificate rating of D, E, F or G.
Tenants in the private rented sector can also apply to pay for a grant to improve their rental property.
The average grant for rental properties is £5,000, and landlords must contribute a third of the total cost.
Solar PV installation
Having a solar PV system installed at your home can slash your electricity bills to almost nothing. But installing the panels is pricey, at around £6,000.
Energy companies used to offer to install free solar PVs. Homeowners could then use as much of the energy generated as they needed, with the company taking the rest.
Unfortunately, these schemes no longer exist. They ended when the government replaced the Feed-in Tariff scheme with the Smart Export Guarantee scheme.
But it might still be worth paying to install solar panels yourself.
It is worth noting that no VAT is payable on energy-saving materials, such as solar panels, from now until 2027.
To gain the most benefit from solar panels, your roof must be south-facing, and free from shade for most of the day.
It should also have a tilt and be large enough to accommodate at least 10 solar panels.
You could potentially save up to £800 a year on energy bills by installing solar panels.
If you live in a sunny area and have a four-bedroom house that can accommodate 14 solar panels, you could potentially save up to £800 a year on energy bills, according to The Eco Experts.
As a result, it would take you just over eight years to break even on the cost of installing solar panels.
If you generate more electricity than you use, you can sell it back to the grid through the Smart Export Guarantee scheme. But you are only likely to make around £100 a year doing this.
Key takeaways
- Energy companies will pay for insulation, glazing and even new boilers for people claiming certain benefits under the Energy Company Obligation scheme
- The Boiler Upgrade Scheme offers property owners £5,000 towards the cost of buying and installing an air source heat pump or biomass boiler
- Grants averaging £10,000 are available to certain households to make energy efficiency improvements under the Green Homes Grant Local Authority Delivery Scheme
Rents on new lets are rising across the UK but it's a highly localised picture
The average rent is now nearly £1,000 a month but there's a wide choice of more affordable markets for people who can be flexible.
The cost of renting a home has reached nearly £1,000 a month as rents rise at their fastest pace for 14 years.
Newly agreed rents averaged £995 a month at the end of March, £88 more per month than at the start of the pandemic, according to our latest Rental Market Report.
The jump is being driven by a shortage of properties to rent at a time when demand is soaring in city centres as students, office workers and international buyers make their return.
But the rental market remains highly localised, and there are still locations where rental properties remain affordable, particularly in rural areas of the country.
As renters face increased pressure on their income due to rises in the cost of living, there has been a marked increase in people staying where they are.
The typical renter now stays in their home for 75 weeks – five months longer than in early 2017.
This trend has extended beyond Covid-19 lockdowns, when moving was difficult, and indicates landlords may not be increasing rents for their existing renters at the same rate as for new ones.
What’s happening to rents?
Rents increased by 11% for newly agreed lets during the past year, after falling by 1% during the previous 12 months.
Increases have been highest in London, where they have soared by 15.7% in the year to the end of March, more than offsetting the previous drop of 10%, on the back of rising demand from students, office workers and people from overseas.
But at the other end of the scale, rents have increased by only 6% in Scotland and 6.9% in the North East, with rents in the latter region averaging just £573 per month.
The jump in rents has left the average single renter spending 37% of their income on housing, and 18.5% for people who share a home, after wage growth peaked at 8.8% last year.
The proportion of income spent on housing jumps to 52% for single renters in London, although it is only 26% for those who share a home.
But for those who have the flexibility to work from anywhere, there are still places where rent remains highly affordable.
For example, in Great Yarmouth in the East of England, South Somerset in the South West, and North East Lincolnshire in Yorkshire and the Humber, rents account for just 15% of joint income for a couple.
Even in London, rents in Bromley are only 19% of a typical couple’s income.
It is also worth noting that wage growth has actually outpaced rental growth since 2016.
What’s the supply and demand for rental homes like?
Demand for homes to rent remains strong across the country, particularly in city and town centres as workers return to the office.
Rental demand is strongest in Scotland, Wales and London, where levels are 68% above the five-year average.
Unfortunately, this demand is not being met by supply, which is pushing rents higher and leading to the typical property taking just 14 days to rent.
The mismatch between supply and demand is particularly acute in London, where the number of homes available to rent is currently only around half the five-year average.
The South West also faces a significant mismatch, with demand up 45%, but supply 32% lower than the long-term average.
Even in the East Midlands, where supply is least constrained at just 6% below the normal level, demand is still 43% higher.
What could this mean for you?
Tenants
The fact that the demand for rental homes is so much higher than the supply is bad news for new renters.
It not only means rents are likely to continue rising in the short-term, but you will also face intense competition for the properties that are available.
But there are still parts of the country where rents are affordable, so if you are not tied to a particular location due to work or schools, it may make sense to consider moving to one of these areas.
Meanwhile, if you already live in a rental property, you may want to stay put, as our research indicates landlords are not raising rents for existing renters as steeply as they are for new ones.
Landlords
The ongoing strong demand for rental homes combined with the shortage of available properties is good news for landlords.
Not only are you likely to be able to achieve your target rent, but you are also unlikely to face long void periods.
However, the market is expected to slow going forward, and combined with the ongoing rise in the cost of living, renters are expected to become more price sensitive.
As a result, it is probably a good idea not to be too ambitious when setting rents for new lets.
What’s the outlook?
In the coming months, the surge caused by post-pandemic pent-up rental demand is expected to ease, which will reduce the upward pressure on rents.
Head of research, said: “Affordability considerations will also start to put a limit on further rental growth, although this may occur at different times depending on location.
“Rents are likely to continue rising for longer in areas which have the most constrained stock levels - currently London, Scotland and the South West.”
Overall, we expect rents across the UK, excluding London, to rise by 4.5% during 2022, and by 3.5% in the capital.
Key takeaways
- The average rent is now £995 a month after rising by 11% during the past year
- The jump is being driven by a shortage of properties to rent at a time when demand in city centres is soaring
- But there are many locations where properties are more affordable