AUGUST 05, 2015 | BY Bill Reid
Financial & Housing Market Update (050815)

There were 191,200 residential property transactions in the second quarter of this year for which Stamp Duty was payable, HMRC has reported.
Meanwhile, Nationwide this morning reported that house prices in July rose by 0.4% to stand at £195,621.
The HMRC transactions figure is 14% higher than in the first three months of this year, but 7% lower than the same quarter in 2014.
In addition to the transactions where Stamp Duty was payable, there were 73,400 transactions where purchasers were not liable for tax. (Below the SDLT threshold)
Meanwhile, data and listings sharing firm LonRes has reported that transactions across prime London were down 22.7% in the second quarter of this year compared with the same period last year.
According to Nationwide, annual house prices in July were 3.5% higher than a year ago.
This confirms what we already knew, the first quarter of this year was dire, but it has picked up more recently, particularly at the lower end. The problem for the market is, who is buying.
A traditional first time buyer (FTB) will in a few years bring the house back to the market place as they move up the ladder. The buyers we are seeing today are predominately buy to let (BTL) buyers who hold a property for a very long time, often their lifetime!
That reduces the supply of FTB properties, whom if they can’t get on the market, they can’t move up the market, therefore a long term problem awaits the already difficult higher end market. If we don’t get sufficient new builds at the affordable end, the market will simply dry up.
Add to that the fact that now that the threshold for SDLT was raised to £145,000, it means that property under that threshold are in increased demand and have obviously risen in price accordingly. A typical FTB house today is priced in the region £150k to £160K. That means the typical FTB would need a deposit in the region of £24,000 and to get a mortgage of £136,000 they would require an income of about £45,000 (varies lender to lender, but Mortgage Market Regulation (MMR) has made it more difficult)  
An independent broker (Private Finance) says first-time buyers are losing out because of MMR.
The broker said that today’s lending climate favors buy-to-let investors over home buyers.
The Mortgage Market Review was introduced in late April 2014 but applies only to the owner-occupier market.
Private Finance said that the new affordability rules are not supporting home ownership.
In contrast, it said, buy-to-let lending remains unregulated with lenders free to advance up to 85% interest-only mortgages to property investors.
Simon Checkley, managing director of Private Finance, said: “We are calling on regulators and policy makers to consider the effects of MMR on residential lending levels.
“If maintained at their current level, they could potentially exclude an entire generation of home buyers from the property market and force them into the private rental sector for years to come.
“Stifling activity in the housing market increases house prices by reducing supply.
He added: “Not allowing first-time buyer’s access to mortgage products similar to those available to buy-to-let investors snapping up the same properties that first time buyers would buy if they could, is unfair.
The real problem for the FTB is not so much the affordability, it is the timescale in getting a mortgage, typically 2 to 3 months sometime longer. A BTL buyer is often a cash buyer or knows they can get a mortgage in 10 days. That puts the BTL buyer at the front of the Que. Even if a FTB gets their mortgage agreement in principle, as soon as they find a property the mortgage checks and property checks start all over again and they have no guarantee they will get the mortgage (perhaps already agreed in principle). Meanwhile the BTL investor is enjoying their second months rent!
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