Opinion  

deVere's Hopkinson decries lack of clarity on housing market

Mitch Hopkinson

The housing market appears quite confused presently, but today's Budget from Chancellor Hammond has not helped to make things clearer.

It seemed to be completely bereft of anything faintly helpful to the housing and mortgage market. Some had suggested a reversal in the recent popular trend of taxing the private landlord - no such news to report today.

It seems Mr Hammond has long since forgotten his property development days - not one comment about the famed UK homeowner.

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House prices continue to rise, although rises are now plateauing in the main due to a lack of available housing - no further funding was announced for supporting more development.

First-time buyer levels have increased in Jan/Feb, in part this is reported as being due to less BTL properties being purchased by non professional landlords, this could help boost the home buying market.

The theory is supposed to be that the market has to start somewhere and if first time buyers are managing to get on the housing ladder (thanks to significant help in previous budgets) - then it follows that this then flows through to the whole of the market.

But there is plenty of on the ground examples of potential purchasers of property in the UK deciding to invest elsewhere - not in the UK housing market  where there is excessive stamp duty costs really which are putting people off.

The Chancellor will probably (rightly?) argue that overseas investors have got a hefty discount on the value of the UK property as sterling sinks lower. making the purchasing power of (particularly) US dollar based investors more powerful.

Hence an additional 3 per cent stamp duty probably is neither here nor there when property is approximately 20 per cent cheaper because of currency devaluation. 

More and more lenders appear to be readjusting their stances around the pricing and stress-testing of BTL products. Because of the progressively more aggressive tax cuts that will start biting next tax year. Stress test levels appear to be relaxing in small steps and lenders appear to be jockeying for position.

The budget has not provided any clearer direction on this aspect. It is particularly interesting to note that now mortgage brokers receive incentives for retention of mortgages (ie not moving to a new lender) -  this is a massive step change to help retain customers.

Perhaps this is the future of the industry when fewer transactions might occur with the professional landlord holding investment properties for the long term?

Lots of lenders are now operating in similar spaces with the larger banks/ building societies dominating the purchase and remortgage market, and smaller lenders crowding the second charge and bridging loan space. The market is crying out for innovation, in my opinion, as it is increasingly vanilla.