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Number of FTBs exceeds number of exisiting owners moving

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DiamondEcho
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Number of FTBs exceeds number of exisiting owners moving

#153582

Postby DiamondEcho » July 20th, 2018, 8:34 am

Wow, 3 replies on one existing topic over the past months. Seems like the sector is veeery out of favour these days. Meanwhile I was reading an interesting article in the Telegraph this morning; the number of FTBs has over-taken the number of existing owners who are moving, primarily due to stamp duty. If this continues it will add to the current upsizing crunch/'crisis' in future.

Excerpt:
'Stamp duty is clogging up housing market as figures show that more first-time buyers are buying homes than movers who already own for first time in over 20 years. For the first time since 1995 the proportion of first-time buyers purchasing homes has overtaken the number of existing home-owners moving house, according to a Lloyds study.
Across the UK there were 170,000 home-movers in the first half of 2018, compared with 175,500 first-time buyers, it found.
Last night experts said the crippling cost of stamp duty was the main reason for the slow down in people moving house, and called for the Government to review the tax burden they currently face.
Last year the Government introduced a new stamp duty relief for first-time buyers designed to help more young people get a foot on the property ladder. But families wanting to upsize, move to a new area or downsize, are still being hit with huge stamp duty bills.'

https://www.telegraph.co.uk/news/2018/0 ... -overtake/

vrdiver
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Re: Number of FTBs exceeds number of exisiting owners moving

#153626

Postby vrdiver » July 20th, 2018, 10:40 am

DiamondEcho wrote:I was reading an interesting article in the Telegraph this morning; the number of FTBs has over-taken the number of existing owners who are moving, primarily due to stamp duty.
Excerpt:
Last night experts said the crippling cost of stamp duty was the main reason for the slow down in people moving house, and called for the Government to review the tax burden they currently face.
https://www.telegraph.co.uk/news/2018/0 ... -overtake/

One alternative scenario that springs to mind is a combination of:
- pent up demand from delayed FTBs (those that have been living with their parents for x years, are starting to come out the other end of that delayed-purchase process) combined with a "dull" jobs market where people are not relocating for work as much as they did in the past, and the fact that previous buyers mortgaged themselves to the hilt and changed houses as property was a one-way bet, whereas today, there is far less point in moving, purely for the investment opportunity, so less demand there as well. Then add in that with low inflation, mortgage debt is not eroded nearly as fast, so people's view of their property wealth and desire to take on more debt is probably diminished.

A potential dampener may also be that some people are worried about job prospects post-Brexit, so delaying a move until that becomes clearer. No idea if it's a significant or even noticeable factor. To be even-handed, there may also be buyers hoping Brexit will have a negative impact on property prices and are holding back, hoping to take advantage of opportunities.

VRD

dspp
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Re: Number of FTBs exceeds number of exisiting owners moving

#153657

Postby dspp » July 20th, 2018, 12:30 pm

Some recent anecdotes in my area:

- Builders quoting with a minimum lead time of 6-months due to full order books for extensions. People staying in existing property & refurbing due to stamp duty.

- One family I know will be renting for a couple of years in an area. They did the sums and realised that the stamp duty for the transactions was greater than the cost of renting.

- Some folk starting to sell BTL stock to avoid the energy efficiency requirements*. Even if they can get an 'E' now they are looking ahead and selling whilst still marketable, not waiting for it to be cranked up to a (say) 'D'. I have watched one professional landlord wrestle with this issue for a year now, and eventually decide to start selling.

I'm very aware that my personal observations may not be representative, nonetheless it may help inform.

regards, dspp


* https://www.gov.uk/government/publicati ... -documents

JonE
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Re: Number of FTBs exceeds number of exisiting owners moving

#153933

Postby JonE » July 21st, 2018, 12:16 pm

dspp wrote:Some folk starting to sell BTL stock to avoid the energy efficiency requirements


There may be other factors coming into play pretty soon.

I see that some media headlines are welcoming a proposal for tenancies to have a minimum fixed term of 3 years with a single, cliff-edge break available to the landlord at 6 months but some classes of landlords may be getting worried about the detail of this (when detail is established) and may take the view that the characteristics of their target market in the geographic area in which they operate could mean their BTL operation becoming unattractive enough to warrant selling-up while they have some certainty about serving valid notice and (eventually) achieving vacant possession.

Existing mandatory and discretionary grounds for possession could both be significantly amended. Will the 'accidental landlord' who lets out their former home while temporarily relocated by their employer be able to rely on the existing provision for recovery of possession when needing to move back after, say, 2 years? Will the need or desire to sell a property with vacant possession (perhaps to manage debt as interest rates rise so as to avoid default) be a valid ground for possession? Although there was much media wailing a few years back about tenants of a defaulting landlord being 'evicted through no fault of their own' by the landlord's lender, I somehow doubt that that lenders will passively tolerate the loss of their existing ability to gain possession.

I assume letting agents will seek ways to replace the income they currently generate by issuing new tenancy agreements to existing tenants. If they can't hit tenants directly then they'll hit landlords but market forces may not permit those extra costs for the landlord to be recovered through rent levels.

Sudden extra thought: presumably the 3 years dates will have to be very carefully handled to avoid the document needing to be a deed. A potential gotcha?

Cheers!

ursaminortaur
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Re: Number of FTBs exceeds number of exisiting owners moving

#154119

Postby ursaminortaur » July 22nd, 2018, 12:57 pm

DiamondEcho wrote:Wow, 3 replies on one existing topic over the past months. Seems like the sector is veeery out of favour these days. Meanwhile I was reading an interesting article in the Telegraph this morning; the number of FTBs has over-taken the number of existing owners who are moving, primarily due to stamp duty. If this continues it will add to the current upsizing crunch/'crisis' in future.

Excerpt:
'Stamp duty is clogging up housing market as figures show that more first-time buyers are buying homes than movers who already own for first time in over 20 years. For the first time since 1995 the proportion of first-time buyers purchasing homes has overtaken the number of existing home-owners moving house, according to a Lloyds study.
Across the UK there were 170,000 home-movers in the first half of 2018, compared with 175,500 first-time buyers, it found.
Last night experts said the crippling cost of stamp duty was the main reason for the slow down in people moving house, and called for the Government to review the tax burden they currently face.
Last year the Government introduced a new stamp duty relief for first-time buyers designed to help more young people get a foot on the property ladder. But families wanting to upsize, move to a new area or downsize, are still being hit with huge stamp duty bills.'

https://www.telegraph.co.uk/news/2018/0 ... -overtake/


Logically those figures look suspect.

With the existing housing stock (ie in the second-hand market) a first time buyer buying a house generally purchases a relatively small property and the previous owner of that property moves into a larger property. However that is generally the start of a chain of moves rather than the end. Although the proportion of house purchases involving a chain has fallen from 90% a decade ago to 67% in 2015 that still means that a typical set of chain sales will involve more owners than FTBs.

https://www.countrywide.co.uk/media/59504/the-chain-unravelling-links-between-sales.pdf

In 2015 two thirds of second hand homes sold involved an onward chain. Over the last decade however, the proportion of second hand homes sold with an onward chain has fallen in all but two years.
Ten years ago 90% of all second hand sales were dependent on the seller finding somewhere new to buy. Today that figure has fallen to 67% with chain free homes no longer as rare to the market as they once were. London, where the high cost of housing means that buyers are most reliant on equity to fund their purchase has the smallest proportion of homes sold chain free in the UK. 26% of homes sold in the Capital last year were sold chain free, compared to 40% in the North West.


Although the trend towards increasing chain free sales has probably continued across the UK since 2015 it seems unlikely that it has fallen enough to allow the number of FTBs to exceed the number of existing owners moving in the second-hand housing market.

This november 2017 article suggests chains are still usually three long or more

https://www.whathouse.com/advice/property-chain/

There are no official figures to show how long the average or extreme chains are. It could be as low as three, while some online forums tell of situations of 10 or more links.


and in London the trend towards increasing numbers of chain free sales has reversed

https://www.ft.com/content/54a91790-bb15-11e7-9bfb-4a9c83ffa852

The percentage of homes in London sold with no onward chain dropped from 28 per cent in 2008 to 21 per cent in 2017 — a trend that accelerated after last year’s introduction of a stamp duty surcharge on buy-to-let and second homes.


And although the number of new houses built has increased I find it hard to believe that even with help to buy schemes for first time buyers they are mainly being bought by first time buyers. So it seems unlikely that that would tip the balance so that the number of first time buyers exceeded the number of moves by existing owners.

dspp
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Re: Number of FTBs exceeds number of exisiting owners moving

#154288

Postby dspp » July 23rd, 2018, 9:35 am

ursaminortaur wrote:
Logically those figures look suspect.........

And although the number of new houses built has increased I find it hard to believe that even with help to buy schemes for first time buyers they are mainly being bought by first time buyers. So it seems unlikely that that would tip the balance so that the number of first time buyers exceeded the number of moves by existing owners.



Isn't one possible part of the explanation that FTBs are buying ex-BTL properties, that are therefore chain free ? That would fit with some of the local anecdote I see in my area.

regards, dspp

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Re: Number of FTBs exceeds number of exisiting owners moving

#154563

Postby Lanark » July 24th, 2018, 12:47 am

These figures are hugely influenced by the Help to Buy scheme, in many areas this is now the only way for young people to get on the ladder, but I fear it may be a trap - the government give you a 20% leg up but only for a new build which are typically more expensive than older properties in the same area.

When the help to buy generation want to sell and move up or move out - there is no way for them to offer a similar 20% leg up to the next purchaser. So why would anyone buy a now used house rather than another New Help to Buy?

Help to Buy mainly benefits the large housebuilders at the expense of everyone else trying to sell a house.

As Maggie once said "You can't buck the market."

GrandOiseau
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Re: Number of FTBs exceeds number of exisiting owners moving

#158199

Postby GrandOiseau » August 9th, 2018, 11:33 am

RICS saying "rents are expected to climb by 15% over the next five years, as the supply of rental accommodation dwindles while demand from tenants continues to go up"

Reason:

#Small landlords are selling up following tax changes that have made buy-to-let properties less lucrative.

#more people are looking to rent, partly because they cannot afford to buy their own homes

Surely a recipe for price falls?


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