UK economic recovery plan is Build Build Build

UK PM vowed to “use this moment” to fix longstanding economic problems and promised a £5bn “new deal” to build homes and infrastructure.

In a wide-ranging speech in Dudley, in the West Midlands, Mr Johnson vowed to “build, build, build” to soften the “economic aftershock” of coronavirus.

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He said the government wanted to continue with its plans to “level up” – one of its main slogans of last December’s election – as “too many parts” of the country had been “left behind, neglected, unloved”.

Infrastructure projects in England would be “accelerated” and there would be investment in new academy schools, green buses and new broadband, the PM added.

Projects in the £5bn investment plan include:

  • £1.5bn for hospital maintenance and building, eradicating mental health dormitories and improving A&E capacity – the government said this is “new” money in addition to £1.1bn in its Spring Budget
  • £100m for 29 road projects including bridge repairs in Sandwell and improving the A15 in the Humber region – this money had already been announced
  • Over £1bn for new school buildings, as announced on Monday – this cash comes from the government’s existing infrastructure plan
  • £12bn to help build 180,000 new affordable homes for ownership and rent over the next eight years – brings together three pots of money already announced by previous Tory governments and Mr Johnson’s administration

Other projects announced in the government’s Spring Budget, which will now be accelerated, include:

  • £83m for maintenance of prisons and youth offender facilities, and £60m for temporary prison places.
  • £900m for “shovel ready” local projects in England this year and in 2021
  • £500,000 – £1m for each area in the towns fund to spend on improvements to parks, high street and transport

Source: BBC News

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Can UK Green Mortgage help climate change?

The UK has set itself a target of net zero greenhouse gas emissions by 2050, but that will be a challenge for the housing market.

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As things stand, domestic housing accounts for nearly 20% of the UK’s carbon emissions. At the same time, there are few ‘green’ mortgage products and even fewer that have been set up to fund making homes more energy efficient.

This matters, because upgrading current buildings will be what helps cut emissions.

According to the UK Green Building Council, around 80% of the buildings that will exist in the UK in 2050 are already constructed.

Few of those are energy efficient. Based on the government’s energy performance certificates (EPC), most of the UK’s housing stock is in the middle, ‘D’, band.

Top of the list in making housing more energy efficient is cutting fuel use. Around 10% of the UK’s carbon footprint comes down to heating – mostly domestic heating.

In principle, green mortgages that help homeowners manage the cost of boosting energy efficiency should be widespread and keenly priced.

In May 2020, the Green Finance Institute published a report on financing energy efficient buildings.

This cited “growing evidence that favourable financing terms can be achieved on securities that have an environmental or social impact label or certification”. 

But only three lenders in the UK currently offer green mortgages – Barclays, Ecology Building Society and Nationwide.

Chris McHugh, our Director of the Centre for Sustainable Finance, describes the UK green mortgage market as “a cautious beginning”.

“The eligible customer base, property types and notional amounts are limited. The price incentives for borrowers appear to be small or non-existent.”

The UK green mortgage market

Indeed you can count the number of green mortgage lenders on the fingers of one hand.

Ecology Building Society and Nationwide both offer lending for green home improvements. Ecology is a very small firm specialising in green finance including sustainable builds. In 2019 it lent £43.5m across 308 sustainable properties and projects.

However, compared to many other mortgage lenders, it’s relatively expensive – with a current standard variable rate of 4.1%.

Nationwide Building Society is a much bigger player with around 12% of the UK market. It  offers preferential rates on green improvements for loans up to £25,000, but only for existing customers.

Barclays has around 8.6% of the UK mortgage market. It does offer green mortgages for “energy-efficient new-build” homes provided by “partner suppliers”. But it doesn’t have any plans to offer mortgages for green home improvements in the near-term.

Lloyds, which has the biggest overall share at nearly 16%, announced in January that it plans to launch green mortgages, but did not give further details.

Right now, lenders may be cautious about broadening their green mortgage offerings as demand is likely to have been hit by the Covid-19 pandemic

“There are far more pressing matters on consumers’ minds,” says John Somerville, our Head of Regulatory Relationships.

“With all green properties and loans, there’s likely to be an extra cost and more underwriting. The appetite to jump through those hoops will be strongly diminished for some time to come.”

Source: The London Institute of Banking and Finance

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UK Property sale hits record low

Residential property sales in the UK in April hit their lowest monthly level since comparable records began in 2005, new figures show.

Houses

There were 38,060 transactions in April, according to provisional numbers from HM Revenue and Customs (HMRC).

This was less than half the level seen in the same month last year.

Spring is usually a busy period for the property market, but the coronavirus lockdown halted activity.

The government lifted many of these restrictions on the sector in England in mid-May. The total number of UK property sales is slightly less than the previous low when the taps were turned off in the property market at the height of the financial crisis in January 2009.

Source: BBC News

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UK Property market estimated to fall by 13%, Is it the right time to buy?

Economists and housing experts are forecasting UK-wide price falls of up to 13%, with “brutal” declines in some areas, as the property market struggles to rebuild during the coronavirus crisis.

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The range of forecasts from the major researchers is markedly wider than usual. At one end is the Centre for Economics and Business Research, which predicts that 2020 prices will be down by 13% “as a lack of transactions, high uncertainty and falling incomes take their toll”. But the estate agent Savills said the hit to the market could be more like 5%, and a third of valuation surveyors are predicting that price falls may be limited to 4% or less.

The post-lockdown market will be a buyer’s market, said Jonathan Hopper of Garrington Property Finders, as he forecast falls of 10% nationally and 15% in some areas.

“Areas with a more resilient jobs market should see values hold up better, but elsewhere the price correction could be more brutal,” he said.

Knight Frank, in a revised forecast issued this week, said it anticipated a fall of 7% in 2020, more than its earlier forecast of 3%. Its analysis suggested prices had already fallen 5% since March, with a further downtick to come.

Source: The Guardian 

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UK Government COVID-19 updates

See the source imageHere are some recent announcements from the government:

  • The number of confirmed deaths from Covid-19 rose above 30,000, putting the UK at the highest official death toll in Europe.
  • The 4,000-bed London NHS Nightingale hospital is to stop admitting new patients. It will be kept “in hibernation” in case there is a second wave of coronavirus patients.
  • The four other Nightingales – located in Manchester, Birmingham, Bristol and Harrogate – will also be wound down.
  • The UK’s test, track and trace plans will begin with the trial of the NHS contact tracing app on the Isle of Wight.
  • Cybercriminals, aided by hostile states, are seeking to exploit the coronavirus crisis, according to Dominic Raab, the foreign secretary and first secretary of state.
  • The UK is now “past the peak” of the coronavirus spread and the government will publish a plan for easing lockdown measures this week, prime minister Boris Johnson said.
  • The NHS has started restoring other services, such as cancer care and mental health support, and will also restart fertility services.
  • Business interruption loans for small firms have been extended from 80% to 100%.
  • A support package is available for the transport industry, designed to keep the flow of goods and services running smoothly in and out of the UK – and around the country.
  • A vaccine is needed before social distancing can end entirely, with Professor Chris Whitty, chief medical officer for England, suggesting some restrictions would be necessary for a “long period of time”.
  • Human trials of a potential vaccine for coronavirus created by an Oxford research team have begun.
  • Loans totalling £250m have been made available to unlisted, high-growth companies and £750m of grants and loans are available for SMEs in research and development.
  • The government is to pay 80% of most people’s salaries, up to £2,500 per month, in addition to a bailout package worth £350bn for businesses struggling due to the coronavirus. Self-employed people will be able to apply for a grant of up to £2,500 per month.

UK property market: Questions asked by buyers and seller

The coronavirus crisis is affecting buyers and sellers alike. An estate agent talks through the hurdles faced by both parties

Spring and summer are often cited as the best time to buy a property, with the warmer weather encouraging more people to put their homes up for sale. But with the Government having all but shut down the UK’s housing market, buying and selling is challenging during the lockdown – although not entirely impossible.

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Here are the questions being asked by buyers and sellers:

Can I still complete?

The Government advises buyers and sellers to “where possible, delay moving to a new house while measures are in place to fight coronavirus”.

However, solicitors are not banned from continuing completions and the Government has accepted some may still have to take place. For those who need to move for reasons such as death, divorce or debt, and for those who want to move perhaps to be in a better school catchment area for their children, there are still some possibilities.

What if I’m looking to buy?

If you are looking to buy, things look great on the face of it. The Bank of England has slashed interest rates to a record low of 0.1 per cent in response to the crisis, meaning mortgages are more affordable than ever as repayments will, in theory, be lower.

However, many lenders have withdrawn tracker mortgages offering the best rates. Savings the banks are making are not being passed onto consumers. Larger deposits are also now required. Nationwide Building Society, one of the UK’s biggest lenders, recently withdrew mortgages with a loan-to-value (LTV) ratio above 75 per cent from sale.

Paul Broadhead, head of mortgage policy at the Building Societies Association, says: “Lenders and borrowers are facing unprecedented conditions. The temporary move away from higher LTV products across the whole market reflects prevailing uncertainty and the fact that physical valuations are on hold. Lenders are focusing on supporting their existing borrowers that have been affected by Covid-19, often with fewer staff available to work.”

What if I need a mortgage?

A downside for buyers is that you have to have 100 per cent of the property’s value in cash to now be in with a chance of securing a property. Assuming you have seen a house you liked before the restrictions came into effect, estate agents are unlikely to put any offers forward where a mortgage is required.

Mortgage valuation surveys are unable to take place during the lockdown because mortgage companies cannot send a surveyor out in person to ensure a property has not been overvalued by an estate agent. This is good news if you are a cash buyer and puts you in an even stronger position with less competition from other buyers.

However, sellers should be aware that cash-rich investors often expect a price reduction, with some offering as much as 30 per cent below the asking price.

What if I’m selling?

If you are looking to sell, it may still be possible. Some agents are making the most of technology and offering virtual viewings and video valuations, with vendors taking their own photos to market their properties.

This sounds great, but it isn’t. Unless you are a professional photographer with a wide-angle lens camera, it’s unlikely you will be marketing your property to its full potential.

It is also doubtful the valuation will be as accurate without the agent having visited. Every property is unique. And while virtual viewings are great for the casual viewer at home who doesn’t have to leave the sofa, they are not so helpful for vendors deciding how keen and motivated a buyer really is.

If an acceptable offer is made, there is even less certainty than usual when it comes to trusting that someone will see the process through to conclusion from sale agreed (subject to contract) to exchange/completion, as they have yet to set foot inside the property.

Some estate agents, such as Purplebricks, charge a fixed fee whether the property sells or not. It is worth noting that according to research firm TwentyCi, Purplebricks received an estimated £18m from 21,380 vendors whose properties were withdrawn having failed to sell in 2019. With actual viewings currently impossible, who knows what their figure for 2020 will be.

Property prices: Where next?

House prices were flat in March, the first time they did not rise in five months, according to the latest data on the UK property market.

Halifax, who compiled the figures, said the housing market began March in recovery mode as political uncertainty about Brexit had passed. Prime Minister Boris Johnson’s election victory had also boosted confidence in the market.

But by the end of the month, the UK was in different territory as coronavirus swept across the country and the property market ground to a halt as the UK was put into lockdown.

Halifax said it was too early to accurately assess the long-term impact of the virus on the UK housing market.

When will the market recover?

Problems with physical viewings and mortgages will make moving house difficult in the short term.

But once the coronavirus crisis has blown over, and the barriers on movement have been lifted, the market should bounce back fairly quickly. After the lockdown is finished, the artificial restrictions on the free market will be released, causing a flood of supply and demand from sellers and buyers.

If furloughed employees are able to return to their place of work on their full salary, consumer confidence will likely be restored. Pent-up demand will hopefully encourage lenders to increase supply of affordable mortgages.

The property market may return to normal sooner than many currently envisage.

 

By Rupert Gray – an estate agent working in the Greater London area

Source: inews

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Covid19: EPC still a requirement for UK property sales and lettings

The UK government will not be relaxing requirements on Energy Performance Certificates (EPCs) despite movement restrictions put in place as a result of the coronavirus. In guidance published by the Ministry of Housing, Communities and Local Government (MHCLG) it was made clear that properties put on the market will still be required to obtain an EPC before being sold, let or built.

AssetRating-EPC-Bristol

It added that assessments should only be conducted where the work is essential.

This follows government-issued guidelines last week that urged people to delay or not begin the process of buying or selling a home unless it was absolutely critical.

A valid EPC is legally required when a property is sold, let or constructed and must be completed by an accredited assessor unless an exemption can be applied.

Landlords and sellers have seven days to obtain a valid EPC from the day the property is marketed, with a further 21 days grace period allowed if all reasonable efforts have been made to obtain one, but it has not been possible.

Restriction of movement laws and social distancing practices which have resulted in almost all valuers and surveyors stopping in-person property surveys are likely to have severely hampered EPC assessors as well.

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Covid-19: UK property market to be suspended as sales drop significantly

UK house buyer interest has slumped as people stay at home to try to limit the spread of the coronavirus, according to property listings websites.

Zoopla predicts housing transactions will drop by up to 60% over the next three months.

Meanwhile, an increasing number of sales that had been agreed before the lockdown are falling through.

See the source image

The government has advised homebuyers and renters to delay moving as much as they can.

“Would-be homebuyers paused major decisions and took stock of the unfolding events in the UK and around the world, even before [restrictions] announced by Prime Minister Boris Johnson,” Zoopla said.

Demand in the week to 22 March slumped 40% on a week earlier, its figures suggest.

The property listings site said the UK housing market had a strong start to the year before the coronavirus outbreak crushed demand.

The pandemic has since led to a “rapidly increasing” proportion of sales falling through, as would-be buyers “reassess whether to make a big financial decision in these shifting times”.

Sales were still being agreed, it found, but at a 4% slower rate than at the same time a year earlier.

The Financial Times has reported that bankers have been urging government ministers to suspend the housing market.

They are concerned about the impact of the pandemic on valuations but they are also worried about issuing loans due to uncertainty about the effect the virus will have on the economy, the paper reported.

In response to the crisis, UK Finance, which was formerly known as the British Bankers Association, said lenders would extend mortgage offers for people who were due to move house during the lockdown.

“Current social distancing measures mean many house moves will need to be delayed,” Stephen Jones, who runs the group, said in a statement.

“Where people have already exchanged contracts for house purchases and set dates for completion this is likely to be particularly stressful,” he said.

“To support these customers at this time, all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date.”

The government has told people “there is no need to pull out of transactions”, instead encouraging them to “amicably agree alternative dates to move”.

The sentiments identified by Zoopla echo a previous announcement from rival Rightmove, which said the slowdown in the UK housing market had been “significant”.

“The number of property transactions failing to complete in recent days and likely changes in tenant behaviour following the announcement of the renters’ protections by the government may put further pressure on estate and lettings agents,” it said, referring to the recent ban on evictions.

The government said on Wednesday that home buyers and renters should delay moving if possible while emergency measures are in place to fight coronavirus.

“If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus,” a housing ministry spokesperson said.

“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.”

Meanwhile, there were reports on Thursday that mortgage lenders had started to temporarily restrict some products for certain customers.

Source: BBC News

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UK Covid19 Lockdown: Only emergency repairs allowed, Landlords and Estate Agents told

The latest advice issued today is that although tradespeople can complete repairs at properties if they take precautions, landlords should avoid face-to-face contact with existing or prospective tenants.

The government has told landlords and letting agents that they should not conduct house viewings or complete routine inspections of properties, but has said that their tradespeople can complete emergency repairs.

See the source imageBut confirmation has yet to come through from the Ministry of Housing, Communities and Local Government about essential tasks such as gas safety and electrical equipment testing and whether these will be exempt from the lockdown as ‘essential services’.

It is also understood that ministers are considering whether to allow many of the companies serving the private rented sector to continue doing their work if a property is owned by someone working in frontline health and emergency services.

Until yesterday industry organisation Gas Safe Register was recommending to landlords that they book inspections by an approved engineer as soon as possible if their renewal date was within the next two months.

The organisation says that following the lock-down announcement last night, it is urgently seeking guidance from the Cabinet Office and the Health and Safety Executive about whether residential property safety inspections will be deemed ‘essential services’.

Also, landlords who are refurbishing properties can continue their work as construction sites have also been given the green light as essential service, it was confirmed this morning.

But all this advice from government remains just that – guidance; the necessary legislation to make it an offence to ignore the rules has yet to make its way through parliament, although this is expected to be achieved at any moment.

One grey area is whether landlords can help tenants move into or out of a property; there are a large number of outstanding rental tenancy contracts that were signed and paid for up-front before the Coronavirus shutdown, and now lockdown, gripped the nation.

Source: LandlordZone

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