The Land Registry Blog

The number of people trying to sell their home rose in June to its highest level in more than two years, according to new figures out today.

The average number of properties for sale per estate agent’s branch increased from 68 in May to 74 in June, the National Association of Estate Agents (NAEA) reported. This is the highest figure since April 2009, which saw an average of 76 homes for sale per branch, the NAEA said. The number of sales agreed also increased, from an average of eight per branch to nine.

However, the percentage of sales to first-time buyers decreased slightly from 24 per cent in May to 20 per cent in June and the number of house-hunters registered per branch also decreased on average from 275 in May to 263 in June.

“The housing market in June showed a significant jump in seller confidence but reductions in house-hunter levels as the wider economic climate continued to restrict potential buyer activity,”  the NAEA Housing Market Report for June.

The report added: “Sales increased in June, with the average number increasing from eight to nine, which is significant in terms of year-on-year figures – June 2010 saw an average of only six sales per branch.”

More realistic pricing from sellers was believed to be an important factor in the increase in sales.

First-time buyers and borrowers with smaller deposits are enjoying the first signs of recovery in the UK mortgage market, according to new statistics revealed today.

“Green Shoots”

Price comparison website Moneysupermarket.com said “green shoots” were visible for first-time buyers as the number of mortgage products available for those with a ten per cent deposit rose to the highest levels since November 2008.

The analysis said there are now 312 mortgage products at 90 per cent loan to value, an increase of 17 per cent since June. As well as the increase in the number of products available, the average rate on 90 per cent mortgages has begun to fall. The rate on fixed-rate mortgages has dropped 0.53 per cent in the past year to 5.87 per cent this month.

However, tracker mortgages at 90 per cent LTV are now more expensive than this time last year, with the average rate now 5.5 per cent.

“Moving In The Right Direction”

First-time buyers have already enjoyed good news from the government earlier this year with the launch of the First-Buy scheme, aimed at reducing the amounts needed for a deposit through a shared equity loan. That good news was further added to by the recent launch by high street bank Barclays of its lowest ever fixed-rate mortgage, with the rate on its Woolwich mortgage reduced by up to 0.5 per cent.

Clare Francis, mortgage spokesperson at moneysupermarket.com, said: “We are still a long way off the number of products that were available pre-credit crunch and those with smaller deposits are still having to pay a higher rate of interest than those who are able to put down 25 or 30 per cent. It’s good to see things are moving in the right direction though as this should make it slightly easier for people to take that first step onto the property ladder.”

New figures, released on Wednesday, indicate a “summer stagnation” in the UK housing market as it emerged that seven out of ten houses put up for sale since the start of the year are still on the market.

The Rightmove House Price Index, released annually, showed that July was the first month this year when sellers dropped their overall asking price. Prices dropped by 1.6 per cent this month, which equates to £3,797 from the average price of a home £236, 597. This represents the largest July fall for more than three years.

Miles Shipside, director of Rightmove, said: “Summer sellers are more nervous about their selling prospects than the early birds who asked ever higher prices during the first six months of this year.

“Early sellers in 2011 had a chance of worming their way into the more active spring market, whereas those coming to market now at the onset of the holiday season have to price more aggressively as many buyers have already gone to ground.”

Three of the country’s leading housing organisations have joined forces to protest against planned changes that could restrict a tenant’s right to complain about their landlord. The complaint centres on fears the government’s flagship Localism Bill which aims to shift power from central government back into the hands of individuals, communities and councils.

The heads of the National Housing Federation, Shelter and the Tenant Participation Advisory Service have sent a joint letter to the newspaper, The Independent, expressing concerns that a clause in the Localism Bill, introduced by the Department for Communities and Local Government, may prevent social housing tenants from complaining directly to their housing ombudsman should they have a dispute with their landlord. The letter claims that the Bill, currently being debated in the House of Lords, contains a clause that would force tenants to take their complaint through a third party, potentially a local councillor, MP or a specially formed arbitration panel.

The letter describes this move as “disempowering for tenants, costly to the public and unnecessarily bureaucratic” and later goes on to add that “Third parties should only be involved at the discretion of the complainant, not at the insistence of the government.

In a recent poll conducted by research company ICM, 82 per cent preferred to deal directly with the ombudsman or have the choice themselves whether to involve a third party.

David Orr, chief executive of the National Housing Federation, said: “When the Government has said it is committed to reducing red tape in all other areas – why are social housing tenants any different?…Housing associations want to provide the best possible service to their tenants, including an effective complaints regime … Adding red tape and disempowering tenants could mean fewer, less successful complaints.”

It remains to be seen whether the bill will make it through the House of Lords without changes but, in its current form at least, there could certainly be implications for the millions of tenants across the country.

The findings of two major government studies, published recently, give an interesting insight into the current state of and public attitude towards the housing market in England.

Renting on the increase

Rather predictably perhaps the number of people renting properties is on the increase, reflecting the difficulty that many first-time buyers may be experiencing in taking their first steps onto the property ladder. The Department of Communities and Local Government’s annual English Housing Survey shows an increase of as much of 55% in the number of renters over the last six years, with 3.35 million, up from 2.15 million in 2003/2004

However this tendency to rent rather than buy may well not always be through choice and a second government survey, released this month as part of the survey into British Social attitudes, seems to back this up. The survey’s findings would suggest that the dominant British mentality – that it’s better to own than to rent – has changed very little over the last 20 years, with 86% of this year’s participants saying they would prefer to buy than to rent if given the choice, and just 14% preferring to rent.

Rather tellingly however, only 17% of current renters actually expected to be able to buy a home in the near future and with much of the country still being gripped by the aftermath of the recession, with the housing market still in a state of slow recovery and with greater competition for rental property and rising rents, it’s little wonder that tenants have a more negative outlook on the housing market than homeowners

Further statistics from the second report seem to illustrate added frustration towards the housing market. According to the survey, private tenants and those living in housing association properties were more likely to say that house prices were too high than homeowners. Overall, 49% of people believe that prices are too high in their area, but this rose to 66% of renters. The majority of renters 57% also said they believed rent levels were too high in their local area

What do these figures mean?

In conclusion the study suggests “There remains a strong preference for buying, rather than renting a home, among the general public and this has changed little over the past two decades”.  But while the British public’s faith in home ownership was unwavering, the survey respondents expressed varying views on why it was so important.

“The public do not perceive one stand-out advantage of owning a home rather than renting, or vice versa, with different sections of the population identifying a range of different advantages; household income and composition appear to be particularly important in linking to perceptions of advantages and disadvantages of the different tenures,” the study said.

The need for government measures

One issue clearly most people are in agreement of, however, was the need to improve access to the housing market, with the study noting that “in order to make homes more affordable, people think the government should give financial assistance to first-time buyers, and get banks to increase access to mortgages”.

It does appear that the Government is at least taking steps in this direction, with the most recent budget including proposals for FirstBuy, a shared equity scheme that loans first-time buyers 20 per cent of their deposit.

But of course it’s too early to tell whether this scheme, as well as other government initiatives to breathe life back into the housing market, will have the desired effect. Only a repeat of these studies in six or seven years’ time will tell if this will be enough to ameliorate the predicament in which many renters and first-time buyers find themselves.

Reports and figures published in the last two weeks have sent out mixed messages about the current and short-term future state of the UK housing market.

Fall in House Prices

The Land Registry’s report on house prices, which many consider to be the most comprehensive of house price surveys, reported that the average house prices in England and Wales had seen an annual fall in February, although prices in London and the East of England rose. The body said the average home in England and Wales fell in value by 1.7% in the year to February, to £162,215, the largest fall since October 2009.

The Land Registry breaks down house prices to property types and reported that terraced homes had fallen most in value (2.7% on average), detached properties fell the least (0.3%). The fall in house prices, coupled with a rise in inflation and weaker employment prospects will lead to a “fragile economic picture” of the next twelve months the Centre for Economics and Business Research (CEBR) has said.

Buyers and Sellers Increase

This week’s housing news, however, was not all doom and gloom; the number of people trying to buy or sell homes has picked up in the past month, according to estate agents. The number of potential sellers rose in March to its highest level for six months, the National Association of Estate Agents (NAEA) said. Earlier this week, a survey by the Royal Institution of Chartered Surveyors (RICS), some of whose members also work as estate agents, also reported that the number of people trying to sell their homes last month had reached its highest level since May 2007.

The NAEA enthused about the usual spring increase in market activity, and suggested sales would improve in the coming months; “Spring has finally arrived and brought with it a much needed boost to the housing market, particularly among sellers,” said Gary Smith of the NAEA…This figure has been low in recent months and this is a welcome indication that reflects a growing confidence that the recovery is well underway…With the bad weather now behind us buyers and sellers alike are returning to the market with a renewed vigour,” he added.

“Stuck in a Rut”

But despite this seemingly positive news, and with UK homeowners bracing themselves for a predicted rise in interest rates, many economists expect the housing market to remain “unresponsive” through the rest of this year. The Council of Mortgage Lenders, or CML, remains concerned about the continued slump of the housing market and recently indicated a “fear of inflation”, and that the housing market was “stuck in a rut”. Many economists believe the market is unlikely to surge forward in the next 12 months and that the UK economy as a whole faces a challenging year.

Property owners with vacant premises in their property portfolios should ensure they have the correct level of legal expenses cover in the event of squatters occupying their premises, insurers are warning.

Insurance giant Aviva estimates that there could be as many as 20,000 squatters in the UK and although squatting is more prevalent in domestic properties, the warning to landlords and commercial property owners with empty buildings is that they are equally at risk.

Mike Colmans, underwriting manager for Aviva said “It is imperative that adequate measures are put in place to prevent squatters from entering and taking ownership, as it can be notoriously difficult to remove (them),”

“We have seen squatters taking over commercial properties, for example, seasonal businesses occupying empty shop units for periods of time…Obtaining interim possession orders from the courts to remove squatters can take time as well as being significantly costly. In addition, by the time an IPO has been issued, squatters might have already moved on,” he added.

He believes that property owners need to be warned of this increasing problem and encouraged to take appropriate security measures “For example, letterboxes should be sealed to prevent mountains of post building up, which is a clear message to passers-by that a property is empty,” said Colmans. “Perimeter fencing should be erected and overall security should be assessed. Property owners should consider hiring security guards, installing extra lighting and generally improving locks, grilles, CCTV and alarms. ‘The more obvious measures must not be overlooked such as making sure that all water, gas and electricity supplies are turned off at the mains and, wherever possible, chaining and padlocking isolation valves,” he added.

Mr Colmans also pointed out that regular checks on a property are mandatory. This is especially important as, in the event of a claim, insurers may not payout if it is felt that appropriate measures have not been implemented to secure and protect an empty property.

Whilst some of these measures may seem excessively expensive, the cost of them pales in comparison to the amount property owners could be forced to pay in order to have squatters removed or to repair damage done by squatters who succeed in entering their property.