Commonhold ‘must become alternative to leasehold’

Commonhold could come the smarter alternative to buying leasehold. The Law Commission has opened a consultation on how to reform the leasehold system by making commonhold easier for homeowners to achieve.

Introduced in 2002, commonhold allows a homeowner to own the freehold on their flat alongside the rest of the owners in the block. Each becomes a member of a limited company that owns and manages the common areas of the building.

However, only a tiny proportion of properties have become commonhold since its introduction.

Extending franchise to benefit homeowners

And during its examination of how to reform the leasehold system in England and Wales, the Law Commission believes extending commonhold can benefit more homeowners.

There are around 4.2 million leasehold properties in England alone, many of them flats or apartments. The owner does not own their property outright but instead leases the land on which it stands from the freeholder for a specific period of time.

Most leases run for hundreds of years, but extending a lease can be expensive and time-consuming. And the risk is that the freeholder can take ownership of the property when the lease does run out, making the property worthless to its owner.

Culture change required

Professor Nick Hopkins is the Law Commission’s commissioner leading the review of leasehold.

He said: “Commonhold provides a once-in-a-generation opportunity to rethink how we own property in England and Wales and offers homeowners an alternative system to leasehold.

“I tinvolves a culture change, moving away from an ‘us and them’ mindset towards ‘us and ourselves’.

“We want to hear what people think of our proposals, so we can be sure the commonhold system will work for homeowners and the wider property sector.”

The consultation is open until March 10, 2019 and interested parties are invited to make their views known.

Gazumping on the slide – except in London

Fewer homebuyers are being gazumped when they try to seal a deal on a property, according to new research.

Online estate Emoov quizzed its users on how many had fallen victim to the practice where a seller accepts one offer and then, before the sale is completed, plumps for a higher offer from another bidder.

According to Emoov, a quarter (25 percent) of homebuyers were gazumped in the last year, down from more than a third (36 percent) in 2017.

Competitive market in capital

However, buyers in London are still most likely to be gazumping victims with two-thirds (66 percent) of those bidding on a property losing out to a higher offer further down the line. That figure is up by 31 percent on the year, demonstrating the competitive nature of the London property market.

Russell Quirk, chief executive of Emoov, said: “Although market conditions remain tough, the good news at least is that gazumping has declined as a result.

“While we are still seeing a steady number of sales each month despite stock levels also remaining low, there isn’t the overwhelming buyer appetite that we’ve seen in previous years.

“As a result, this reduction in competition is seeing fewer homeowners receive and opt for a last-minute higher offer at the expense of their existing buyer.

“That said, the art of gazumping is still very prevalent across the capital where demand remains strong in numerous locations, despite the wider topline figures showing an overall slowdown.”

1st-time buyers most likely victims

First-time buyers are the most likely victims of gazumping with 58 percent of 25-34-year-olds saying they’d lost out on a property because of it.

Only 16 percent of women confessed to having been gazumped, compared to 34 percent of men.

Landmark digital transfer of UK property expected within the year

The first fully digital transfer of a property is expected to be completed by the Land Registry within the next year as conveyancing prepares for the greatest innovation in decades.

Now in its second year, the Land Registry’s Digital Street, a research and development project that includes industry leaders, has ambitious targets to reach. In April 2018, the first digital mortgage deal was entered into the land register.

Incorporating smart contracts

Now the next step is to incorporate smart contracts, so a transfer of land or property can be completed digitally for the first time in the UK.

Lauren Tombs is the senior product manager at Digital Street. In a recent blog post, she explained how the Land Registry’s focus is on understanding precisely how digital contracts will interact with the land register.

Smart contracts are encoded using Bitcoin or on blockchain and use both buyer and seller’s digital signatures. These types of contracts are expected not only to speed up the conveyancing process but to revolutionise how property solicitors and conveyancers complete land and property sales.

Developing concepts

Lauren Tombs wrote: “Digital Street will be developing concepts over the next coming months to test future models with our users and to validate our learning. We’ve decided to make understanding the technology our first priority, particularly smart contracts, and distributed ledgers.”

Currently all land and property sales must be registered with the Land Registry within 30 days of completion. Most solicitors submit the details electronically.

One-third more retirement properties expected by 2022

New research has revealed that the number of properties built specifically for retirees will increase by almost 30 percent in the next four years.

Knight Frank’s retirement housing report says the private retirement property market will double in value by 2022, up from its current £44 billion.

Along the way, according to the real estate giants, the number of available units for sale or rent will rise by a third.

The lack of suitable properties for older homeowners to downsize and move into is illustrated in the Knight Frank report, which shows 16 retirees currently chase each existing private retirement property.

Retirement age population is growing

The UK’s retirement age population is expected to rise to 12 million within the next decade, increasing the pressure on a housing market that is currently struggling to serve older people and younger families.

With fewer suitable properties for retirees on the market, pensioners are remaining in homes that are too large for them, in turn restricting the supply flow to families who want to upsize.

Knight Frank’s report says an extra three million retirement living properties are needed right now simply to meet demand from the over-65s.

Many over-65s want to downsize

Meanwhile, independent equity release specialists Key claim a third of retirement age homeowners want to downsize but can’t find a suitable place at the right price.

Dean Mirfin, Key’s chief product officer, said: “Downsizing should make financial sense for older homeowners as it releases money to pay for retirement, and it also should make sense for the property market as a whole as it frees up bigger houses.

“Pensioners are sitting on property wealth of more than £1 trillion, which could significantly improve their standard of living in retirement. and helping them make the best use of that money would boost their finances and the economy as a whole.”

Breeze into Blackpool, England’s most affordable spot for 1st-time buyers

Iconic seaside resort Blackpool is the most affordable place in England for first-time buyers.

Research by Post Office Money says the north-west town is the No.1 spot for those desperate to get a foot on the first rung of the housing ladder.

With average house prices in Blackpool of £112,000, first-time buyers would need to save for four years on a salary of more than £39,000 to become a homeowner in the town.

Lincoln, with average house prices of £143,9500, took the No.2 spot in Post Office Money’s poll of more than 1,000 first-time buyers. A first-time buyer would need an average salary of £39.834 to buy there.

The research revealed that the average first-time buyer will save for four years for a deposit, cutting back on other expenditure and luxuries along the way.

Prepared to make lifestyle compromises

Ross Hunter of Post Office Money said: “While many prospective buyers choose to make lifestyle compromises as they save towards their first home, there is no ‘right way’ to reach your deposit goals.

“Some FTBs will prefer to take longer saving for a deposit rather than cut back on their monthly spending (23 per cent), whereas others will be willing to compromise on the property itself (17 per cent).

“Half of all FTBs (56 per cent) will also turn to their family for financial assistance to help build their deposit. One inevitable element of the house hunt that all buyers will need to contend with is finding an affordable area in which they can invest their hard-earned money.”

Top 10 most affordable places

The top 10 most affordable places for first-time buyers with average house price and required salary are:

1. Blackpool, £112,000, £39,611; 2. Lincoln, £143,950, £39,834; 3. Hull, £110,000, £37,840; 4. Rotherham, £133,000, £37,840; 5. Sandwell, £137,950, £41,024; 6. Stoke-on-Trent, £110,000, £41,024; 7. Southampton, £210,000, £56,429; 8. Tameside, £137,500, £39,611; 9. Barnsley, £124,995, £37,840; 10. Wigan, £130,250, £39,611.

Barclays in £1bn project with Homes England

A new collaboration between Barclays and Homes England will offer £1 billion in extra finance to build thousands of new homes.

Barclays will put £875 million into the Housing Delivery Fund with £125m coming from Homes England, the government agency set up in 2017 to improve housing across England.

Most of the cash will be directed towards supporting small and medium-sized businesses to build property for sale or rent, including social housing,retirement living and private rented accommodation.

Diversifying the market

With loans ranging from £5m to £100m, developers and house builders will bid for the finance needed to deliver their own projects and help diversify the housing  market where almost two-thirds of new homes are currently delivered by just 10 developers.

Launching the fund, John McFarlane, chairman of Barclays, said: “There is a vital need to build more good quality homes across the country. This £1bn fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need.

“We are very pleased to be working with government to get the country building more homes, more quickly.”

Fantastic opportunity

Housing Secretary James Brokenshire also welcomed the new finance for the Housing Delivery Fund. The Government announced last year that it would prioritise increasing the delivery of new homes in England, setting a target of 300,000 to be built every year within a decade.

Mr Brokenshire said: “This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market.”

And the chairman of Homes England, Sir Ed Lister, added: “The Housing Delivery Fund demonstrates Barclays’ commitment to the residential sector and will provide a new funding stream for SME developers to help progress sites and deliver more affordable homes across England.”

Affordable homes planned for London’s Olympic legacy sites

Around 3,000 new homes are to be built on three sites on London’s Queen Elizabeth Olympic Park. London Mayor Sadiq Khan announced the project, saying at least 50 percent of the new homes would be affordable.

They are to be built on three sites in east London: Stratford Waterfront (600 homes), Pudding Mill (1500) and Rick Roberts Way (900).

Up to £10 million of funding from City Hall will be invested in the project over the next two decades as the Mayor’s office works with the London Legacy Development Corporation (LLDC), which owns the land, to speed up construction. The project will also involve a number of housing and infrastructure grants.

Investment in the area

MrKhan said: “It’s vital that our Olympic legacy truly benefits Londoners,and that includes affordable housing as well as culture, education and business.

“I’m committed to ensuring at least half the homes across the three remaining sites for development will be social rented or other genuinely affordable homes.

“There’s no getting away from the fact that to deliver on this commitment costs money, but this is an investment, and City Hall and the public sector in general will benefit from council tax and business rates thanks to the incredible regeneration of the area.”

Much-needed infrastructure

Lyn Garner, chief executive of LLDC, added: “Housing is a critical part of the London 2012 legacy. Four new schools have been built on the Park already, together with thousands of new jobs in the local area to provide the much-needed infrastructure to support these new neighbourhoods.”

£26k house price premium to live near best state schools

English parents are willing to pay more than £26,000 to buy a home in the catchment area of top the state schools, according to research by Santander Mortgages.

House prices close to the top 100 state secondary schools in England carry a 42 percent premium compared to surrounding areas. And to ensure their child gets a coveted place in the best the state can offer education-wise, a fifth (20 percent) of families have had to downsize to secure a property in that catchment area.

Almost a quarter (24 percent) say they’ve had to work longer hours to finance their move while the same percentage are now forking out much more on commuting costs because they moved further away for a better school.

Game the system to gain a place

According to Santander, properties in the catchment area for England’s top 1,000 state primary schools also carry a price premium, albeit much smaller at 8 percent above the surrounding area.

On average, parents would pay an extra £26,860 to buy a house that guarantees a spot for their children at a top state school.

And as well as being willing to fork out a substantial extra amount for a home, parents also admitted the lengths they are willing to go to for their children’s education.

The Santander research reveals how they game the system by moving their child into the home of a friend or relative already living in the school catchment area or register their child at a property when they don’t live there.

Sacrifice a lot for children

Miguel Sard, managing director of mortgages at Santander UK, said: “Living in the vicinity of a top-ranked school carries a significant house price premium. If families are looking to move into a catchment area specifically to boost their chances of getting into an elite school, they can expect to pay a hefty price.

“It is important when considering purchasing a property that people understand the true costs as the house price is just one of many. Stamp duty, solicitors’ fees and moving costs mount up.

“Parents are prepared to sacrifice a lot to give their child the best start in life.”

‘Generation Rent’ still has sights set on home ownership

An overwhelming majority of 24-44-year-olds want to become homeowners, according to new research.

London-based law firm Collyer Bristol brought together a panel of renters and homeowners in that age group in London and the south-east to quiz them on their ideas and plans for renting and home ownership for its report entitled Home Ownership Attitudes and Aspirations.

Dubbed “Generation Rent”, that age group showed it is following in the footsteps of older generations by confirming that home ownership is still the goal.

Aspirations high among young

In the report, 73 percent of men and 57 percent of women say they hope to buy their own home within the next five years. A third (29 percent) say owning a home in that time frame is unrealistic, but only 9 percent of those questioned admitted to having no aspiration for home ownership at all.

Of those aged 20-24, every single person questioned said they wanted and hoped to buy their own home. That figure drops to 59 percent in the 25-34-year-old bracket but up to 63 percent for 35-44-year-olds.

Home market changing rapidly

Alex O’Connor, partner in commercial real estate at Collyer Bristow, said: “We all know there is a housing crisis in the UK and that it is particularly acute in London and the south-east.

“We have seen developers bring forward new tenures, such as dedicated Build-to-Rent schemes, but home ownership remains the ultimate goal.

“Itis interesting that all of our panel’s 20-24-year-olds say that they will own their own home, only for those hopes to be dashed when the reality of buying a property hits home. That picks up slightly, perhaps as our panel start to marry and think about starting a family.

“The home market is changing rapidly with new tenures emerging and institutional money looking to change the rental market for the better. Whilst our panel might choose to rent for longer, home ownership remains the ultimate goal.”

Londoners heading north in increasing numbers

New research has revealed that more Londoners than ever are moving out of the capital, and many are choosing to move north.

According to Hamptons International, who joined forces with LonRes to analyse who is moving out of the city and who is remaining, around 30,000 people left London in the first six months of 2018. That’s up 16 percent on the same period a year ago and also up 61 percent on the first six months of 2008, before the start of the financial crisis.

Most of those leaving London stay in the south, but lots of people have been priced out of a home in the south-east and so look further afield. The Hamptons research says those leaving a prime London location for another prime location do pay more for their new home, often because they are trading up on size.

1 sale in 6 goes to capital buyer

More Londoners are opting to switch to life in the Midlands or the north of England, with 21 percent of movers choosing those regions say Hamptons.

One in every six homes sold in the east of England goes to a London buyer, according to the research, because London movers pay on average 30 percent less for a new home in that region than one in the south-east.

Affordability is stretched

Aneisha Beveridge, research analyst at Hamptons International, said: “With affordability stretched, more Londoners are moving out of the capital to find their new home. The proportion of London leavers heading north has tripled in the last 10 years.

“More people are making a bigger move and buying a larger home sooner to avoid having to pay stamp duty on additional moves as they trade up. But for many, this means heading further north.

“However, more first-time buyers are staying in the capital to purchase their first home than last year. The savings from stamp duty relief and the availability of Help to Buy has meant that more first-time buyers are able to remain in London than before.

“But raising a deposit remains a hurdle for many, which helps explain why increasing numbers of first-time buyers who leave London are heading north.”