Mark Blackwell, managing director of xit2, property data specialists, comments,
“Funding for Lending isn’t really sustaining first time buyer activity, and has been poorly targeted. Lower monthly payments for the better-off – those with the most equity – will do little to lift a sluggish housing market.
Given the Government’s pledge to support borrowers, today’s 8% fall in gross mortgage lending will be a significant disappointment. A one percent uplift in gross mortgage lending from a year ago is a very poor performance given the external impetus lenders are able to access. Including non-banks in Funding for Lending could make the scheme more effective.
However, lenders can be applauded for some of their caution – a return to the recklessness of 2007 would be as much of a failure as a further collapse in lending levels. Quality of lending is as important as quantity. Proper property and credit risk management will be vital for a more sustainable model of lending in future.”
Angel Mas, President – Mortgage Insurance Europe for Genworth, commented:
“Using the Government guarantee for new high loan to value mortgages will expose the UK taxpayer to unnecessary liability - potentially a multi-billion pound loss if there was a late 80s/early 90s style property crash. It is extraordinary that – given the existence of capacity and expertise in the private mortgage insurance sector –the Government has not yet considered the involvement of private mortgage insurance in order to reduce the risk to the UK taxpayer.
Given the role of irresponsible lending in the crisis, this seems an oversight that puts the taxpayer at unnecessary risk, whilst leaving the Government in the hands of the banks when it comes to ensuring prudent lending standards are maintained under any extended scheme. The mortgage insurance industry has the expertise to help ensure lending remains prudent, and standards do not slip – which is critical for the economic health of the country. We hope the Government avoid crowding out existing private capacity and engages the mortgage insurance sector on risk sharing opportunities as well as to use its expertise to administer such a complex scheme”
Commenting on the announcement of the Help to Buy scheme in today’s Budget, Jonathan Moore, managing director of EasyRoommate, said:
“The Help to Buy scheme will go some way towards releasing some of would-be buyers from the rental sector but this policy in isolation isn’t enough to solve the housing problem. There is still a huge supply and demand imbalance in the rental market and this needs to be addressed. Boosting house-building is one part of the answer but the Chancellor has missed a golden opportunity to unlock accommodation sat idle across the country.
There are approximately 25m empty bedrooms in the UK. If even a fraction of these were opened up to paying tenants it would release some of the pressure building up in the rental sector. The rent a room scheme allows homeowners to earn £4,250 per year tax free from letting out accommodation in their home. But this allowance hasn’t been increased for years. Extending how much homeowners can earn on rent before being taxed will encourage thousands more landlords into the market, and ease the supply shortage renters are currently suffering. Unfortunately, George Osborne has ignored this opportunity and the property market as a whole will suffer for it.“
CML director general Paul Smee says:
"The announcement of Help to Buy which will help mitigate the risk of those lending low deposit mortgages shows a positive re-focus on promoting home ownership. The benefits will not be immediate, and we need to look at the detail of implementation, but this could have a significant impact in the medium term."
The CML will be issuing a further release shortly commenting in more detail on the specific proposals.
Richard Sexton, director of e.surv chartered surveyors, said:
“The government’s pledge to build 15,000 more affordable homes is welcome, but it’s just a drop in the ocean. A lack of affordable housing is a gaping wound in the economy. More homes need to be built – and the government needs to do much more to help. We need 270,000 new homes a year in England to meet demand, yet in 2012 there were just 105,090 housing starts. That’s a critical shortfall.”
“A lack of homes is stymieing the recovery. Urban land accounts for 10% of land England, yet green belt regions cover 13%. We’ve got the balance wrong. If urban land area was increased by just 2%, site requirements would be met. And that’s without cutting into inflexible green belt sites. The problem is incentive. The government needs to encourage local councils to build, and land owners to develop banked land. And brown-field sites are a resource that can’t be ignored. There is enough brown-field land to accommodate almost 300,000 homes. But the developing process is complex and tedious. It needs to be simplified.”
Sean Oldfield, CEO at Castle Trust commenting on today’s Budget announcement regarding the transfer of child trust funds to junior Isas:
“Our research shows that nearly one in three parents or 2.8 million families save regularly into Child Trust Funds despite concerns about rates on cash Child Trust Funds slipping back and issues about a lack of choice as providers focus on products that are open to new business such as Junior ISAs.
“Saving for children is by definition a long-term investment and it makes sense to maximise returns by regularly reviewing where you are saving. The move will be welcomed by Child Trust Fund investors who can now access innovative solutions including residential property investment which can be accessed through a HouSA, Castle Trust’s housing index tracker.”
The British Property Federation has welcomed the fivefold government funding increase to kick start build-to-rent schemes.
The £200m made available in December's Autumn Statement will be expanded to £1bn, and will provide equity or loan finance to support development stage finance.
Ian Fletcher, director of policy at the British Property Federation, said: "It's encouraging the Government's confidence in build to rent has been reciprocated and we are delighted to see that the equity funding was heavily oversubscribed. Working in partnership with Government the sector should deliver an exciting and quality array of homes for renters."
Nerys Lewis, personal finance expert at Confused.com said:
It's disappointing for savers that George Osborne is ‘actively considering' extending the Funding for Lending Scheme in this Budget. The scheme has meant that banks don't need to tempt savers with high rates, as they can rely on the scheme to get the money to lend to businesses, whilst it's good news for businesses, it does mean savers miss out.
Despite the low rates available, it's still worth making the most of your ISA this year as they allow you to save tax free. Rates are disappointingly low this year compared to previous years, but with many of last year's cash ISA accounts having 12 month bonuses, you could still be better off switching to a new account.
HBF today guardedly welcomes the ‘Help to Buy’ measures announced in the Chancellor’s Budget .
• NewBuy Mortgage Guarantee Extension. The announcement of a scheme for the wider market is a welcome step that should result in increased home sales across the whole housing market. The scheme will need the support of a wide range of mortgage lenders, for new and second hand, if it is to have the desired impact on the overall market and help boost new homes building
• Proposals for an extension of FirstBuy, the shared-equity scheme for new home buyers, are very welcome. This will open it up to a much wider audience and so should help drive up house building numbers. Removing the house builder’s equity contribution also frees up developers’ balance sheets such that they can invest in new land and home building activity.
• Affordable housing. We welcome a commitment to funding for more affordable homes. It gives the suppliers of affordable homes some certainty.
• Private rent. More money for Private rent is clearly welcome. The over subscription on the previously allocated £200M showed the appetite for investment in private rental delivery.
Speaking today, Stewart Baseley, Executive Chairman of HBF said;
“A lack of affordable mortgage availability remains the biggest constraint on housing supply, something Government now clearly understands and is looking to address. Extending NewBuy to the second hand market should create churn in the market place and drive up sales across the Board – including for new homes.
We do though need to ensure a level playing field across the whole market. Extending FirstBuy is very welcome and will provide a real option for people currently unable to buy – so providing a vital market for the new homes industry. Building the homes the country desperately needs can be a key driver of economic activity. Government must be praised for its attempts to stimulate activity, but must also be wary to get the details right.”
Mark Hayward, President of the National Association of Estate Agents (NAEA) said:
“Housing received a surprising level of attention in today’s Budget but there is still work to be done. Plans to inject £130 billion for low mortgage deposits and expand NewBuy and Right-to-Buy schemes are welcome, but significant challenges remain to ensure such housing initiatives are fully understood and adopted.
Since the start of the economic downturn, the NAEA has consistently called on the Government and the banks to look at more comprehensive ways to improve access to funding for prospective homeowners, especially for the important first time buyer market.
In the absence of a Stamp Duty Holiday for first time buyers, it is imperative that politicians, the house building industry and the major lenders continue to look at more ways to offer support to this fragile part of the sector.”
Peter Williams, Executive Director of IMLA, comments on the 2013 Budget statement from the Chancellor:
“Given that the slow momentum of the recovery seen in the mortgage market and despite the Funding for Lending Scheme (FLS), the government's latest £3.5bn housing package – focussed on expanding FirstBuy and encouraging higher loan to value (LTV) lending through the new Help To Buy mortgage guarantee – is welcome news for both lenders and borrowers.
Both schemes run for three years and experience tells us it takes time to get programmes up and running. However, because both build on existing schemes, we might hope there will be a quicker impact bringing new momentum to the market for both first time buyers and existing owners.
The use of a guarantee is a sensible way of making good use of limited government resources and this should bring new activity to market. One concern would be the stimulus does more for house prices than housing supply.
The Chancellor said this Budget was good news for home builders – but improving mortgage access is only part of the equation. In the absence of a further commitment to increase home building, will we see house prices artificially inflated from a continuing lack of supply? Questions must still be answered on new build plans before we can accurately predict the shape of the future housing market with any confidence.”
Sue Foxley, Head of Research at Cluttons, said:
“An ongoing commitment to the Funding for Lending scheme and the announcement of the Help to Buy scheme are welcomed, but in London and the highly restricted residential areas in south east, an increase in funding in the absence of new supply can only result in price rises well ahead of earnings.
“Therefore, in parallel, the local planning politics in the Home Counties in particular that are holding back residential development must be addressed. The Chancellor noted the ongoing reform of the planning laws but to date there has been little sign of delivery.”
Roarie Scarisbrick, partner at independent buying agents Property Vision, comments:
“The destructive impact of last year’s budget measures has not been alleviated but at least no further damage has been done to the property market. Whether the Government’s ‘Help-to-Buy’ scheme will have more success than previous schemes will be closely monitored but this has the potential to help boost the number of new homes available with positive knock on effects for the construction industry and other businesses linked with the property industry such as removal companies, builders, decorators, appliance and houseware companies for example.
Whilst the London property market relies on international investors and buyers, it will continue to be at risk of our political masters. However it is reassuring to see that in this year’s Budget, the emphasis is on making the UK an attractive place to do business and enticing wealth creators to live and work here.”
National Housing Federation chief executive David Orr says:
“We welcome the Chancellor’s realisation that people around the country are struggling to buy their own homes, and the measures introduced today may help a number of them. But the danger is that if we don’t tackle the fact we’re still not building enough homes, we’ll just create another housing bubble that will continue to push house prices up and out of reach of the majority.
Our housing market has long been weakened by the lack of new houses being built, which are forcing up rental and house prices – leaving millions of people struggling to get on the property ladder or pay their rent. The Government should be focusing on unlocking investment to build more new homes as a way of managing down the housing benefit bill and boosting the economy. We welcome the measures to support new supply but they are very small scale.
And we still need the Government to help unlock land banks, free the small publicly owned derelict sites so we can build houses on them and give housing providers long-term certainty over how much income they can expect so they can start planning and building beyond 2015. With the impact of welfare reform still to be fully felt, we need reassurance and long-term commitment so we can play our part in raising the finance needed to build more homes.”
Darryl Flay, CEO of Essential Living, said:
"The focus on housing is welcome and promises of a 20% equity loan sounds great in principle - but the crunch will come in what mortgage rates look like for customers utilising it. At the end of the day, someone taking out a mortgage with just a 5% deposit will still be viewed as a higher risk than someone with more cash.
We've seen constant profit increases from house builders but little in the way of more homes being built and this is unlikely to change in the short term without a change in approach.
The government needs to push councils to bring more homes for rent forwards while recognising that the levels of affordable housing demanded from rental developments cannot be the same as traditional housing.
The concept of ownership at all costs is outdated. We need to recognise that renting has a vital role to play in delivering new homes and providing quality accommodation for those wishing to live in urban centres who may have good jobs but not the mountains of cash required for deposits."
Paula Higgins of the HomeOwners Alliance says:
“Help to Buy as practical help for homebuyers but warns that it isn’t risk free: new homes fall in value as soon as the key is turned in the door, trapping buyers in negative equity. The new mortgage guarantee looks positive in principle but the Government has dodged any measures that would make a real difference to the affordability of owning a home, preferring instead to fiddle around the edges, helping people manage their escalating debt rather than taking away some of the crippling unfair costs such as stamp duty.
“While the equity loan scheme announced today will get some houses built, it won’t be enough. The Government should have considered a targeted Help to Build scheme, getting more houses in the right places and at the right price available on the open market, if they want to make a dent on the decades of chronic lack of house building.”
BSA Budget comment:
Responding to measures announced by the Chancellor, Adrian Coles, Director-General of the BSA said:
Help to Buy Scheme
"The BSA welcomes the Chancellor's focus on home ownership as a core part of an 'aspiration nation'. It is good to see that the measures proposed are focused not only on first time buyers and new properties but on the market as a whole. This is a positive indicator as a fully functioning housing market includes those looking to move up as well as onto the housing ladder.
We are supportive of the principles laid out in the Help to Buy scheme outline, particularly the fact that it will be available to a wide range of lenders. However, there will inevitably be questions that need to be addressed, not least the cost of the commercial fee, the impact on borrowers at the 79 per cent threshold and whether all lenders will benefit from an element of capital relief.
The current rules see lenders having to put more capital aside to support higher loan to value lending which acts as a natural restriction. Despite that, a third of mortgages from mutual lenders were in this category last year. It seems logical that if lending risk is mitigated by a government guarantee, capital relief for all lenders will result. This will be an essential part of making this scheme a success. We look forward to working constructively with Government to make Help to Buy work."
Statistics:
• In 2012, 33% of all mortgage loans from mutuals were between 80 and 95% of the value of the property and a further 2% were above 95%.
• In total, 54% of loans made by mutuals to first-time buyers during 2012 were between 80-95% of the value of the property and a further 3% were above 95%.
• According to data from Moneyfacts the average mortgage rate from mutual lenders in February 2013 was 3.79% compared to the average rate across the whole market of 4.07%. Mutual lenders accounted for 78% of mortgage best buys in the month.
Child Trust Funds and Junior ISAs
"We welcome the announcement today of a consultation on the ability of consumers to transfer savings from Child Trust Funds to Junior ISA's. We have long campaigned for consumer choice in this area and will be actively engaged in the work to come. We are disappointed however, that once again the Government has ignored the plight of adult savers."
Equity Release Council responds to the Chancellor’s 2013 Budget statement
Nigel Waterson, Chairman of the Equity Release Council, says:
“The anticipated cap of £72,000 on individual contributions towards long term care costs still leaves many people struggling to make their budget sheets add up in later life. One in five UK adults told us the Government should implement the £35,000 cap recommended by the Dilnot Report – and one in three said the State should cover the full cost of care for everyone.
Today’s Budget may help people to understand what support they will receive once they retire – but unfortunately, any suggestion that lowering the cap will be enough to meet our ageing population’s care needs is wishful thinking. An even lower cap may also be wishful thinking, especially in the current climate, but it shows how concerned people are about how they can afford to support themselves in later life.
The Lords Select Committee report – Ready For Ageing? – estimated that people over state pension age owned roughly £250 billion in home equity that could be released in 2009, and that this would increase by 40% by 2030. When other sources of funding are so stretched, using equity release products to access this capital in a secure way is a practical and common-sense solution to a problem that will not go away.”
Commenting on today’s Budget, NHBC Chief Executive Mike Quinton said:
'The Chancellor has today given a welcome shot in the arm for the UK's housebuilding industry.
'We warmly welcome the expansion of measures for people who want to buy their own homes. This will help boost the housing market and provide vital support for the construction industry.
'Builders up and down the country have been working hard to build high quality homes while operating in tough economic times. Housebuilding fell 9% in 2012 compared to the previous year. It is therefore great news that housing has been the centre piece of this Budget.
This is a positive step for homebuilders and homeowners alike."
Shelter’s chief executive Campbell Robb said:
"This budget ignores business leaders, economists and even government ministers who've been calling for radical action to kick-start our economy by building more homes. Instead, the government has chosen to extend existing schemes which have so far have failed to deliver on any scale.
House building is currently at its lowest levels for almost a century. This budget was a huge missed opportunity to build enough homes to make sure our children will have a stable and affordable place of their own. Helping a small number of first time buyers today will do little to meet the aspirations of young families tomorrow.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments on the new mortgage guarantee:
“Today’s mortgage guarantee announcement should provide the extra boost that’s needed to accelerate lending for house purchases up the loan to value (LTV) scale. It will relieve a real headache for anyone struggling to fund a deposit for a home, and should help to boost confidence in the market at a time when house prices are beginning to rise.
The January 2014 start date cannot come soon enough, because – while we have seen remortgage LTVs increase by more than 5% on average under the Funding for Lending Scheme (FLS) – any change for purchase mortgages has been disappointingly slow. In fact, the average purchase LTV has risen by less than 1% since FLS was launched.
With £130bn worth of mortgages promised, a sustained increase in lending volumes is on the horizon – but in the meantime, there is plenty of scope to improve the targeting of FLS and encourage higher-risk lending.”
Andy Frankish, new homes director at MAB, comments on the expansion of the equity loan scheme:
“Introducing a new equity loan scheme that is fully funded by the government is a surprise – but very welcome – announcement. It will allow developers to receive 100% of their capital on sale, so they can invest in more land and build projects in order to create the momentum that is critical to the wider housing market recovery.
Opening up the scheme to existing home owners as well as first time buyers is brilliant news for those struggling to move up the property ladder. We can expect to see new build transactions continue to increase from 1st April and contribute to a more buoyant housing market. But with construction output having stalled, the next challenge will be to ensure that enough properties are built to meet demand.”
Caroline Kenny, UKALA Executive, comments:
“We welcome the Chancellor’s announcement in today’s budget to reduce company based national insurance payments. Our membership includes many Small and Medium Enterprises (SMEs) and this move, plus the cut in corporation tax to 20p from April 2014, will provide some relief to a sector which has suffered disproportionately during the economic downturn. The scrapping of the rise in fuel duty will also be welcome news to our members, many of whom have to travel extensively around their markets.”
With government figures showing that the private-rented sector now accounts for over 3.8million households and the number of new homes being built still falling far below what is needed, the demand for rented accommodation is only going to grow in the years to come. With this in mind, it is not surprising that more and more investors are looking to buy-to-let. Whilst the new Help to Buy initiative will go some way towards stimulating house building towards meeting demand, prospective landlords should be aware they have an important part to play in providing good-quality accommodation suited to the changing needs and expectations of tenants.”
At UKALA, we’re committed to ensuring that tenants will benefit from a wider choice of quality property and that properly trained, professional letting agents are poised to deliver this level of service to the consumer.”
Responding to the Chancellor’s Budget announcements today around home buying, the Chairman of The Conveyancing Association (CA), Eddie Goldsmith says:
“We welcome the Chancellor’s efforts to help reinvigorate the stagnant housing market through these measures. So far, all the Government’s initiatives, whilst offered in the right spirit, have just not had much impact. These new proposals which combine more help for new homebuyers, with a significant underwriting of loans, may very well reach those parts which other previous schemes haven’t.”
Genie statement regarding 'Help to Buy'
Commenting on George Osborne’s budget statement today Mr Hicks said:
“The Chancellor’s ‘Help to Buy’ scheme is on the right path to helping people in to homeownership.
Innovation has been desperately needed in the housing market over the past few years and so I welcome the Chancellor’s proposals to stimulate the housing market.
However shared equity loans will not be the answer for everyone as a deposit is still required and there is still the need for more innovative ways to help people to get into homeownership right across the board.
Saving any deposit at all is too much for some families, who are already stretched to breaking point. Genie is a home purchase plan which doesn’t require any deposit and so makes it easier for first time buyers to get onto the housing ladder.”
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, comments:
“Help to Buy will inject some life back into the mortgage market. It will kick start new house building and will help potential buyers realise their dream of owning a first home. At the moment high deposit requirements and low savings rates are stopping hard-working people realising that dream. The scheme will be a real incentive for first time buyers over a three year period - a period which will be critical to the recovery of the economy and the housing market. It will be particularly useful for buyers who can’t lean on the bank of mum and dad for support.
The demand to own a home is there – but the supply of finance has been sadly lacking. Taking bold, proactive measures to help buyers build a deposit directly tackles one of the fundamental causes preventing first-time buyers from owning their first home. It is a very welcome step.”
Post Office Mortgages comments on the Government's ‘Help to Buy' scheme which will provide assistance to potential homebuyers.
Nick Kennett, Director of Financial Services at Post Office said:
"Today's Budget gives potential homebuyers reasons to cheer, whether buying their first home or looking to move. The Chancellor's ‘Help to Buy' scheme is just what is needed to get the country moving.
The Help to Buy scheme sees the Government loan potential buyers an interest-free loan for five years up to 20 per cent of the value of the new home, available from 1 April 2013, and provide a "mortgage guarantee" for people with smaller deposits from January 2014. We look forward to seeing the full details emerge over the coming months.
Our own research found there is a massive appetite among potential homebuyers to own their own home, with a third (33 per cent)1 of people planning to buy a property in the next five years. However, many will face the uphill struggle of raising a deposit. This move from the Government to increase the access for potential homeowners to get on the property ladder provides a much needed boost to the housing market."
