Docklands News

Hundreds of thousands of buy-to-let properties in England will become loss-making by the end of 2023, according to analysis by the consultancy Capital Economics, as landlords are forced to endure steep increases in their interest rates. Capital Economics estimated 365,000 buy-to-lets will become loss-making by the end of 2023 as their current tracker mortgage deals expire. There are about 4.5m rental homes in England, meaning losses will hit at least 8% of stock – or one in 13 properties. A further 182,500 buy-to-let homes could becoming loss-making in 2024, if rates do not fall. Experts said these “timebomb properties” will drive down house prices across the market even further, as landlords sell up. 

The Daily Telegraph (19/12/2022)  

The Treasury is planning to extend its mortgage guarantee scheme, which has underwritten £4.4bn in low-deposit home loans since it was launched last year amid fears that first-time buyers could be frozen out of the mortgage market. The scheme was unveiled by the government in April 2021 and has helped 21,000 first-time buyers secure home loans with relatively small deposits. But it is due to end on December 31 and there have been concerns that this could lead to low-deposit mortgage deals disappearing again, amid fears over falling house prices and a forthcoming recession. Treasury sources said the government was weighing up whether to extend the scheme, but that it was likelier than not that it would continue. An announcement on its future is expected early this week. 

The Sunday Times (18/12/2022)  

House prices fell 0.9% in London between September and October, in contrast with a 0.3% increase across the UK, the Office for National Statistics reported Wednesday. The average house price in the capital was £541,720, compared to £296,000 for the country as a whole. House prices grew 12.6% in the year to October, or £33,000, up from 9.9% the previous month. Average house prices in England, Scotland and Wales hit record levels in October. The typical house price in Scotland increased by 8.5% over the year, to £195,000, while in Wales it rose by 11.8% to £224,000. In England, the typical property value was up 13.2% annually to £316,000. The average house price in Northern Ireland increased by 10.7% over the year, reaching £176,000. 

Financial Times (14/12/2022)   The Daily Telegraph (14/12/2022)  

The Government has given its approval for Mayor of London Sadiq Khan to add an additional £20 to benchmark Band D council tax bills from next April to help Transport for London balance its day-to-day budget. Mayor Khan announced last year that he planned to add a £20 a year levy to average council tax bills for three years. 

Evening Standard (13/12/2022)  

Economists at Credit Suisse say house prices are set to slump due to rising interest rates and a looming recession. Warning that the rising cost of mortgages will see the burden of payments hit the highest since 2009, Credit Suisse’s Peter Foley said: “We expect house prices to fall at least 10% next year in the US and UK.” Credit Suisse expects borrowers in the UK to be hit harder by rising interest rates than the US because the “overwhelming majority of US mortgages” are fixed for 30 years while most UK borrowers fix their interest rates for between two and five years. Elsewhere, the Office for Budget Responsibility believes prices will fall 9% over the next two years. Meanwhile, Karen Ward, chief market strategist at JPMorgan Asset Management, has ruled out a “doom loop of construction activity contracting massively, people getting into negative equity and consumer behaviour really changing because of the housing market.” 

The Daily Telegraph (12/12/2022)  

The Sunday Telegraph looks at how middle-class borrowers face a new mortgage crackdown as lenders tighten their criteria and the cost of living crisis hammers credit scores. Analysis shows the number of middle-class borrowers - those with household incomes between £70,000 and £150,000 - with adverse credit searching for a mortgage has increased by two thirds since 2019. A survey by the lender of 7,000 adults found that more than a quarter of middle-class borrowers had been rejected for a mortgage in the past year because of a thin or impaired credit history. Each bank and building society has its own affordability benchmark that dictates how much it is willing to lend and the criteria borrowers must meet to secure a mortgage. Matthew Jackson of the mortgage broker Mint Financial Services said a growing number of applicants were being rejected as a result, especially when lenders used automated underwriting. He said: "This issue has been particularly rife among newly qualified professionals, who may have a great salary but not necessarily the bigger deposit to buy in cities or a particularly large credit file." 

The Sunday Telegraph (11/12/2022)