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High loan-to-income mortgages: new home loans could give borrowers an extra £200k

Eligible homebuyers could get a mortgage worth seven times their salary for the first time in over a decade.

The new product from online mortgage lender Habito comes after the Bank of England separately announced plans to relax lending rules in December.

To qualify for Habito’s higher loan-to-income loan, applicants must have a basic salary of £75,000 or more per year.

Alternatively, one applicant in a joint application can borrow up to seven times their salary if they are qualified, practising and registered in one of 14 listed professions and earn a minimum of £25,000. Buyers must also have a 10 per cent depositand only one applicant in a joint application can borrow up to seven times their salary

The professions eligible for the mortgage are: police, firefighters, nursing, paramedics, doctors, accountants, barristers, teachers, engineers, lawyers, dentists, architects, surveyors and vets. Habito says this is because these professions offer a reasonable prediction of future earnings, job security and employability.

How much can I borrow for a mortgage?

Since the interest rate stress test was introduced in 2014 to make sure borrowers could afford to service their mortgage if interest rates rise, most lenders will only offer a maximum loan-to-income ratio of 4.5 times earnings. This has put buying a home even further out of reach for many buyers, especially in London where the average property costs 11.7 times the average salary.

Habito’s new lending rules could increase the amount a solo buyer earning £75,000 could afford to pay for a home by more than £200,000.

If their borrowing was capped at 4.5 times their income they could borrow £337,500. With a 10 per cent deposit this would get them a home worth £371,250. Borrowing seven times their income would offer £525,000. Adding the 10 per cent deposit would buy a home worth £577,500.

For joint applicants where one works in the specified professional fields and earns £25,000 and the other applicant also earns £25,000, their borrowing would be capped at 4.5 times combined salary, or £225,000. With the Habito One mortgage they could potentially get seven times one salary and five times the other, meaning they could borrow £300,000.

Is a higher LTI mortgage risky?

The online mortgage broker announced the enhanced lending criteria on its full-term fixed rate Habito One mortgage, which allows buyers to borrow at rates starting from 2.99 per cent for the entire term of their mortgage.

Borrowers on a fixed-rate mortgage usually need to remortgage after a certain period of time, often two, five or ten years, or else find themselves slipping onto their lenders standard variable rate, which can be expensive.

Habito says it is able to offer the higher loan-to-income mortgages because the interest rate on the loan is guaranteed for the entire length of the loan, reducing the risk of the borrower not being able to afford payments in future.

Daniel Hegarty, founder and CEO of Habito, said: “Longer, fixed-rate mortgages mean that customers are completely protected against any threat of fluctuating interest rates, in a way that shorter fixes of two or five years mortgage deals don’t allow for.

“As a lender that considers every applicant’s case individually, we’re confident that with suitable criteria in place, in the right circumstances, eligible customers can safely and securely boost their borrowing to buy the home that truly suits their needs and their life plans.”

Full-term fixed rate mortgages are not common in the UK but are already popular in other countries including France, Denmark and the US.

This is partly because British buyers worry about hefty early repayment charges to get out of a mortgage during the fixed period, for example if they need to sell their home.

Will I be able to get a mortgage at seven times my salary?

Some mortgage brokers expressed doubts about how many buyers would actually be offered mortgages at seven times income.

Mark Harris, chief executive of mortgage broker SPF Private Clients said: “With current regulations restricting each lender to 15 per cent of applications at over 4.5 times loan-to-income, one wonders whether lenders can get the volume of borrowing to truly make a difference.

‘While seven times income sounds high, will borrowers be able to get to that level once existing affordability rules are enacted? Even at lower loan-to-values, borrowers do not always hit the theoretical LTI caps.

“For those with one of the professional vocations listed, existing lenders already offer enhanced LTIs, so it is worth shopping around to find the best deal.”

Habito said that due to longterm fixes not being subject to the same regulations as short term fixes, the lender has no percentage cap on the volume of lending it can do at seven times.

Colin Payne of Chapelgate Private Finance pointed out that key workers pay significant pension contributions each month, making larger mortgage repayments out of their take-home pay potentially unaffordable.

He said: “The irony is it adds fuel to the fire in terms of house prices making that ‘forever home’ more unaffordable for many. It feels like a headline to increase enquiries and then offer alternative lending options, a ‘sprat to catch a mackerel’, and that cannot be the best outcome for buyers.”

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Plans to force buy-to-let owners to pay up to £10,000 to boost energy efficiency

  • Campaigners are calling for plans to charge landlords up to £10k to be scrapped 
  • Plans are for all new rental homes to have an energy rating of C or above 

Campaigners are urging the Government to scrap proposals to make landlords pay up to £10,000 to improve the energy efficiency of their rental homes.

The National Residential Landlords Association suggested that landlords could not reasonably be expected to pick up the tab in the way that the Government is suggesting for stringent new rules affecting buy-to-let properties.

In an official statement, NRLA said that the plans were based on the ‘misguided assumption that all landlords are property tycoons with deep pockets’.

In a consultation that closed in January, the Government proposed that from 2025 where a new tenancy agreement is signed, the property will need to have an Energy Performance Certificate rating of C or above.

From 2028, all rental properties will need to meet the new standard, even where it is not a new tenancy agreement.

The Government has suggested that, in meeting these targets, landlords should be expected to pay up to £10,000 to make the necessary improvements.

However, the NRLA said that this imposed cap fails to accept the realities of different property and rental values across the country.

It follows research from NRLA that showed private landlords making an average net income from property of less than £4,500 a year. (Scroll down for more information about how this figure was calculated.)

The National Residential Landlords Association is calling on the amount that landlords should be expected to contribute to be linked to average market rents in any given area – known as broad rental market areas – as calculated by the Valuation Office Agency.

Under the NRLA’s proposals, this would mean the amount a landlord would need to contribute would gradually taper from £5,000 to £10,000, taking into account different rental values – and by implication, property values – across the country.

VAT and council tax reductions

Alongside this, the NRLA is calling for a package of fiscal measures to support property investment.

It said these should include the development of a decarbonisation tax allowance, where VAT would no longer apply to energy efficiency and low carbon work.

And it said council tax should not be charged where energy improvements are being made to rental properties when they are empty.

Ben Beadle, of the National Residential Landlords Association, said: ‘We all want to see as many energy efficient rental properties in the sector as possible.

‘Besides being good for tenants, improvements made to rental properties ensure they become more attractive to prospective tenants when being marketed by landlords and agents.’

However, he added: ‘The Government’s proposals for the sector are not good enough.

‘They rely on a misguided assumption that landlords have unlimited sums of money and fail to accept the realities of different property and rental values across the country.

‘Ministers need a smarter approach with a proper financial package if they are to ensure their ambitious objectives are to be met.’

David Reed, of Richmond estate agents Antony Roberts, said: ‘We all want to see improvements to energy efficiency but If these proposals come to fruition, there’ll be a rush of landlords with property in vast swathes of suburbs – where older, less efficient properties make up a greater proportion of the stock – selling rather than incurring what could be considerable costs in retaining an investment in property.

‘With yields so low, returns barely meet costs as they are, especially as the latter have grown significantly in recent years either directly (Tenant Fees Act and electrical regulations) or indirectly (unable to offset mortgage interest).

‘Tenants love charming period conversion flats in good commuter territory and seldom is efficiency/an EPC rating at the forefront of the search criteria, whereas location and provision of attractive accommodation win hands down. There are simply not enough newer, in theory more efficient, properties being constructed to meet tenant demand.

‘The private rental sector vitally needs a healthy supply of good property and landlords who own one or maybe two rental properties make up a large sector of the market. Many are already disgruntled by recent changes and longer-term plans are under question. If they leave, the effect on tenants will be hard felt – a further restriction of supply giving more upward pressure on rental and lack of choice.

‘Hopefully consideration will be given to where there is no easy-fix or realistic programme of improvement to achieve grade C status or better.’

How much do landlords make?

Private landlords make an average net income from property of less than £4,500 a year, according to the The National Residential Landlords Association.

Here is how the NRLA reached that figure… 

The English Private Landlord survey said that the average – median – gross rental income for a landlord before tax and other deductions is £15,000.

 Average costs for landlords would be:

– Repair and replacement of furnishings – based on the previous tax exemption for 10% of annual rent (£1,500)

– Cost of a gas safety certificate (average £80 required annually – checkatrade average)

– Electrical safety check (average £265 performed every 5 years. £53 annually – checkatrade average)

– Deposit protection (£13 from TDS)

– Tenant referencing cost (for two tenants £49 NRLA tenant referencing)

– Interest-only mortgage for the average UK property (£250,000) with a 20% deposit (cheapest available £6,096 annual)

– Insurance (£531.15 for building and contents insurance from Hamilton Fraser using average floor space for PRS property https://www.statista.com/statistics/292206/average-floor-area-size-of-dwellings-in-england-by-tenure/)

– Agency fees (£1200 based on 8% agency fees)

The NRLA based its calculation on an average landlord of a house let to a couple with an interest-only mortgage, and assumed that tenants move annually.

Total gross rental income – £15,000

Repair and replacement costs – £1,500

Tenancy management costs – £726.15 (includes average cost of insurance, gas safety certificates, 1/5 of the EICR cost, deposit protection and tenant referencing)

Agency fees – £1,200

Total deductions before tax and mortgage costs – £11,573.85

Amount that can be taxed – £2,314.77 (£11,573.85 x 0.20)

Tax after mortgage interest relief accounted for – £1,095.57 (£2,314.77 – (£6,096.00 mortgage costs x 0.20)

Remaining balance after Tax – £10,478.28 (£11,573.85 – £1,095.57)

Mortgage costs – £6,096.00 (based on cheapest available 80% Loan to Value mortgage on the average property in the UK of £250,000)

Remaining balance after all average costs deducted – £4,382.28 (£10,478.28 – £6,096.00)

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Mortgage rates: Get a fixed deal as soon as possible

The Scrooges at Threadneedle Street are preparing to deliver an unwelcome Christmas present for millions of borrowers and wannabe home buyers: the first Bank of England interest rate rise for more than three years and only the third since July 2007.

The nudge on the interest rate tiller is likely to be tiny, probably only 0.15 per cent, lifting Bank Rate from an all-time low of 0.1 per cent to a still remarkably skinny 0.25 per cent.

But what will it mean for mortgage holders and those looking to take out new home loans?

For the majority that already have mortgages on fixed deals — probably around two thirds of the total and 90 per cent of new borrowers — very little in the short term at least. Their products are locked in to the rates they took them out at until the fixed term expires.

For the minority on variable and tracker rates their borrowings costs will rise in line with the Bank of England rate.

So a borrower with a tracker rate of say, 1.5 per cent, is likely to see that go up to 1.65 per cent.

For a borrower with a £250,000 repayment mortgage that will mean an increase in monthly bills from £999.86 to £1,017.56. Not crippling, but not welcome either on top of all the other rising costs of living such as gas bills.

Will mortgage interest rates rise soon?

The fixed rates available in the market to first time buyers, movers or remortgagers are unlikely to go up on the day of the announcement from the Bank of England’s Monetary Policy Committee next month or possibly in December.

They are linked to the swap rates at which banks and building societies can borrow in the City’s wholesale markets and  have already been creeping up, albeit from remarkable lows, over recent days in anticipation of the Old Lady’s move.

What’s the cheapest mortgage deal I can get now?

Although sub-one per cent fixed rate deals are still available to borrowers with deposits of 40 per cent or more, they are steadily drying up.

Over the past fortnight they have fallen from 131 to 116 — mainly two-year fixes — according to data from Moneyfacts with more being withdrawn virtually every day.

The increases are still small. One of the biggest high street players Barclays, for example, raised its two years fixed rate this week from 0.86 per cent to 0.91 per cent.

Its five-year fix for borrowers with a 25 per cent deposit went up from 1.21 per cent to 1.31 per cent. At the very bottom of the market five year fixed rates were available below one per cent earlier in the year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “If you are one of the lucky ones who got a five year fix at below one per cent that is probably as low as it’s going to get — but they are still historically low rates.”

The market remain incredibly competitive with lenders sitting on vast lakes of cheap money that they struggle to know what to do with.

Mr Harris said lenders were caught in a game of bluff, reluctant to be the first to raise rates and lose market share, or be the last and get squeezed on their profit margin.

What are the best mortgage deals for first-time buyers?

Ray Boulger, senior technical manager at broker John Charcol, pointed out that at the other end of the loan to value spectrum some rates are even falling, good news for London first time buyers struggling to clamber onto the ladder at a time when prices are rising again.

For example Newcastle Building Society announced this week that it is reducing its rate on two year fixes for borrowers with only a five per cent deposit by 0.3 per cent to 2.79 per cent, while its five year fixed rate has gone down by 0.29 per cent to 3.19 per cent.

Should I lock in a cheap mortgage now?

When the puff of white smoke finally emerges from the metaphorical chimneys of the Bank of England next month or December, it will come as no shock to the City, the mortgage markets or borrowers.

A rise has been on the cards ever since it was clear that inflation will remain stubbornly above its two per cent target well into next year.

The more interesting questions are how far and how quickly will rates rise.

Next month’s increase may only add a few tens of pounds to typical mortgage bills, but further steps will see that accumulate to significant and painful sums.

If ever there was a time to lock into rates that remain lower than almost any point in the history of lending it is now.

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Think tank proposing annual property levy

Council tax should be scrapped and replaced with annual payment equivalent to 0.5% of homeowner’s property, says think-tank

  • Labour-leaning think-tank suggests council tax should be replaced by annual levy
    The Institute for Public Policy Research called for a ‘proportional property tax’
    Under their system, someone living in a house worth £1million would pay £5,000

As well as replacing council tax, the new levy would also replace the stamp duty which people pay when they move house.

The think-tank said the move would lead to a fall in house prices of 3 per cent in London and other well-off places in the South.
Shreya Nanda, IPPR economist, said: ‘Those who did not own property during the long house price boom have been locked out, and too many face steep rents, cramped flats and eye-watering mortgages.
‘A proportional property tax would instead ensure that these gains were shared more fairly across society.’

A property tax of 0.5 per cent could mean three quarters of households in England paying less than what they do now.

Last night, a Treasury source said there were no plan to introduce such a property tax.

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MPs push for proportional property tax

A group of MPs has suggested the government consider a “proportional property tax” to replace the current council tax, in a bid to fund the growing cost of social care.The idea has come from the all-party Housing, Communities and Local Government committee, which is led by Labour MP Clive Betts but with the majority of members being Conservative MPs.In a new report the committee says “reforms are needed to ensure the sustainability of local government finances, including an urgent solution to the funding of social care in England.”
One of its recommendations says the government should “implement changes to council tax and consider wider options for reform” while Betts states specifically: “In the longer term the government should consider options for wider reform of council tax and business rates, including possibly replacing them with a proportional property tax.”Other recommendations include widening the funding base of local government to make it less vulnerable to shocks such as the pandemic, including by giving councils more flexibility over local taxes and other revenue-raising powers.Various bodies have called for proportional property taxes in recent times.Most recently a cross-party think tank called Bright Blue wants the government to introduce such a tax as a replacement for stamp duty, urging instead an annual proportionate property tax on the current capital value of houses with a tax exemption for properties worth up to £50,000 and a 25 per cent surcharge for second home owners. Liability to pay would be with owners, not occupants.

For over a year now there has also been speculation of possible changes to Capital Gains Tax on the sale of homes to help fund additional spending to cope with Covid.

The latest proposal from the Housing Communities and Local Government committee of MPs is in response to the need to fund social care.

Clive Betts says: “A solution to social care funding would go a long way to restoring local government finances. Covid-19 has also hit councils hard and, while the government responded to the pandemic with substantial financial support, they now need to come forward with a long-term sustainable way of funding councils and the services they provide.

“The system of local government finance should enable councils to increase revenue by growing their tax base while protecting those councils who are less able to do this, through no fault of their own.”

This is a statement by Andrew Dixon, founder of ‘Fairer Share’

The Government has a problem when it comes to its “levelling up” the UK agenda. It has promised to make a meaningful difference in the lives of their voters, particularly in the ‘red wall’. But doing so requires the combination of long-term investments in transport, broadband, education, and dispersion of private enterprise across the country. In other words, not a lot that voters will notice any time soon.

This is where tax comes in. Changing the tax code can be done in a matter of years rather than decades. Effective change can put cash in the hands of voters between election cycles, making a difference to household finances that voters can feel when their MP next shows up on their doorstep.

The most egregious part of the current system is our property taxes. Council tax is regressive, forcing millions into debt, while stamp duty puts a brake on mobility, and hinders economic growth.

At Fairer Share, we advocate council tax and stamp duty abolition replaced by a proportional property tax where owners would pay 0.48 per cent of their property value every year. Across England, 76 per cent of households would gain under the system, seeing a reduction in the amount of tax they pay on their primary residence. The biggest winners are, helpfully for the Government, located in the North and Midlands – areas that the Government so desperately wants to level up.

Council tax in particular is antithetical to levelling up. Council tax values are 30 years old, a year older than the first text message and four years older than DVDs. They result in distortionary costs that hit the North and Midlands hardest. A resident of Hartlepool, for example, in a £150,000 home would pay over £2,000 in council tax whereas a £10million mansion in Westminster would pay just £1600. On average every resident in Hartlepool pays 2.5 times the rate of council tax to property value than the national average.

Revaluation is desperately needed and valuations need to be done continuously so that we never reach this absurd system again.

Work done by the International Property Tax Institute shows that there is no technical problem with revaluation. A wide variety of different jurisdictions (including New York City, Ontario, British Columbia) and countries (including Netherlands, New Zealand) use some sort of automated valuation model to aid their property tax systems.  Zoopla, Rightmove, and Hometrack provide a pretty decent example of private companies in the UK who do this work and if we wanted to maintain the system wholly with the state, the Valuation Office Agency already has the required data in order to implement the system itself.

We would not have to go far to find a model of similar type. Property tax in the Netherlands is based on much the same principles as a proportional property tax and undertakes re-evaluations on an annual basis.

But the Government knows this because it does a similar but harder job already. Business rates revaluations are undertaken on a regular basis. There is a broad consensus that this is much more technically challenging than valuations of residential property with higher levels of resulting challenges to valuations.

Resultingly the Government should not worry about overwhelming the VOA with challenges. Residential property valuation challenges internationally are less than two per centt of the stock, and less than half the rate of challenges for business rates. With bills coming down for the vast majority of properties, most people will take their cash and run before they worry about their valuation. For those whose bills rise, the cap at £100 per month will limit the need for revaluations at the top end of the market as well.

The only reason revaluation has not happened already is that it has been deemed too politically difficult to do while maintaining the old, unfair system of council tax. And therein lies the real problem.

But by sticking with the status quo, both the Conservatives and Labour are missing a trick. Both parties know that voters in and around the red wall will be crucial to their prospects in the next general election. They should also know that current proposals around infrastructure are unlikely to shift the dial with these voters by the time the next general election comes around.

Economic analysis by Fairer Share makes clear that a proportional property tax would lead to lower bills for most households in England. A number of Labour and Conservative MPs want their leaderships to get behind the policy, along with think tanks from both sides of the political spectrum. More than 120,000 people have also signed the Fairer Share petition calling on the Government to replace council tax, stamp duty and the bedroom tax with a Proportional Property Tax.

Our analysis also makes clear that concerns about valuations are a red herring. A fairer system would clear the hurdle for valuations. It should not stop either Labour or the Conservatives from doing what is needed in the UK and reforming our outdated unfair residential property tax system.

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House prices see first fall since January as stamp duty holiday ends

The average house price dipped for the first time since January, falling by 0.5% in June, according to the latest Halifax house price index.

As a result, annual house price inflation eased to 8.8%, compared to 9.6% in May.

Despite this, average prices are still more than £21,000 higher than this time last year, following a “broadly unprecedented period of gains”, according to the research.

Additionally, whilst the two Midlands regions and Greater London saw slightly slower annual price gains compared to May, all the other regions and nations continued to see a strengthening of inflation.

Wales (12.0%) continues to lead the way on annual house price growth, registering its strongest performance since April 2005, whilst Northern Ireland (11.5%), the North West (11.5%), Yorkshire and Humberside (10.9%) and Scotland (10.4%) all registered double-digit gains.

For Northern Ireland and Scotland, the annual price rises were the highest recorded since late 2007, while for the North West and Yorkshire, inflation was the strongest since early 2005.

At the other end of the scale, the South of England continues to lag somewhat behind the rest of the country, with Eastern England and the South East recording inflation rates of around 7%.

Greater London saw house price inflation of just 2.9% year-on-year, though Halifax says “there are several unique factors likely to be weighing on the capital’s property market”.

Halifax’s managing director, Russell Galley, said: “With the stamp duty holiday now being phased out, it was predicted the market might start to lose some steam entering the latter half of the year, and it’s unlikely that those with mortgages approved in the early months of summer expected to benefit from the maximum tax break, given the time needed to complete transactions.

“That said, with the tapered approach, those purchasing at the current average price of £260,358 would still only pay about £500 in stamp duty at today’s rates, increasing to around £3,000 when things return to normal from the start of October.

“Government support measures over the last year have helped to boost demand, particularly amongst buyers searching for larger family homes at the upper end of the market. Indeed, the average price of a detached home has risen faster than any other property type over the past 12 months, up by more than 10% or almost £47,000 in cash terms. At a cost of over half a million pounds, they are now £200,000 more expensive than the typical semi-detached house.

“That power of homemovers to drive the market, as people look to find properties with more space, spurred on by increased time spent at home during the pandemic, won’t fade entirely as the economy recovers. Coupled with buyers chasing the relatively small number of available properties, and continued low borrowing rates, it’s a trend which can sustain high average prices for some time to come.

“However, we would still expect annual growth to have slowed somewhat more by the end of the year, with unemployment expected to edge higher as job support measures unwind, and the peak of buyer demand now likely to have passed.”

Tom Bill, head of UK residential research at Knight Frank, commented: “The figures indicate how the second half of the year is unlikely to bear much resemblance to the first half for the UK housing market. We expect house price growth to narrow to mid-single digits as tax breaks wind down and supply picks up. Comparisons with the global financial crisis are misleading given how low interest rates remain and the fact the mortgage market acts as more of a brake and less of a lubricant for housing market activity than it did in 2007.

“House prices were driven higher by a supply squeeze as the UK came out of the pandemic, an effect seen in other sectors of the economy. If you add in a stamp duty holiday and the fact pent-up demand had been building for five years against the uncertain backdrop of Brexit, the result was a burst of house price inflation. In what may be a sign of things to come in the UK, housing market activity is now beginning to moderate in North American markets as the distortive effects of the pandemic recede.”

Sundeep Patel, director of sales at specialist lender Together, added: “Today’s figures reflect the first signs of stamp duty winding up, with house prices falling by -0.5% in June, the first monthly dip since January. Annual growth also softened at +8.8% compared to May’s +9.6%.

“While the average house in the UK costs £260,358 – and prices are still over £21,000 more than they were this time last year – this dip has largely been anticipated given activity is expected to slow further after the summer. Indeed, it’s likely we’ll see figures dropping from the top end down to lower single digits by the end of the year. With the hotly anticipated Freedom Day back in our sights, a slight return to normality could see more sellers list their homes, offering broader supply in what’s been an overpopulated market.”

“Specialist lenders will be paying close attention to the shape of the market over the next few months. There are likely to be opportunities created from the backlog in demand from keen buyers needing better flexibility from the highstreet in order to quickly snap up properties.”

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Grand Designs water tower sold: Grade II-listed London home that cost £2 million to renovate sells after price reduction

Grand Design fans may recognise the water tower home which cost its former owners nearly £2 million to transform.

The Grand Designs water tower in Kennington, that once supplied the workhouse that Charlie Chaplin lived in as a child, has finally been sold after the price was slashed from £3.6 million to £2.75 million — Homes and Property can exclusively reveal.

The unique 10-storey property, which was rescued from dereliction just over a decade ago and underwent a £2 million transformation into 4,500sq ft home, has sold this time around in less than two months and has just made the stamp duty holiday deadline.

The Chancellor’s Covid tax break saves buyers £15,000 and ends on 30 June.

Dating back 150 years, the abandoned structure was bought in 2010 by a savvy real estate developer and his partner and converted on a nail-biting episode on Grand Designs.

The new owner is considering adding a hot tub to the unusual property’s glamorous roof terrace / Foxtons
Leigh Osborne and his partner Graham Voce spotted the tower from their rented apartment on the 36th floor of the Strata building, just a few hundred yards away.

They bought it for just £380,000 and spent close to £2 million in transforming the abandoned Grade II-listed building into a five-bedroom, four-bathroom home. They risked everything to complete the project, which cost far more than they had budgeted for, and even put some costs on Osborne’s grandmother’s credit card.

The home was first put on the market by Osborne and Voce in 2018 where it sat for six months before the price was lowered once and withdrawn. It was then launched again in April at the lower price as lockdown restrictions began to ease. Contracts were exchanged this week.

The tower was built in 1867 to provide a 30,000-gallon water supply for the nearby Lambeth Workhouse where more than 800 destitute families were once housed and where seven-year-old Charlie Chaplin lived with his impoverished mother.

The renovated tower’s top room is used as a reception area and covers 24 sq ft with panoramic views / Foxtons
The refurbishment included the restoration of the tower and the addition of a two-level glass cube on top giving views across central and south London with the largest sliding doors in Europe installed. The breath-taking top room is used as a reception area and covers 24 sq ft with panoramic views.

“I have always been fascinated by castles and this is the closest I’ll get to owning one in central London. I plan to put a dining table in the top observation room and may look into a hot tub if the roof terrace allows,” says Hamer.

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Property sales at record high

The UK is experiencing “one of the busiest markets in years” as the number of buyers enquiring about each home for sale hit a record high.

Prospective buyer numbers are 34 per cent higher\ than a year ago, before the lockdown in the housing market when the country was still in the midst of the so-called ‘Boris bounce’, following the decisive Tory general election win.

The latest Rightmove house price index said this was the best sellers’ market in a decade as two-thirds of properties on estate agents’ books have had their sales agreed.

As a result, the average asking price rose by 2.7 per cent in the year to hit £321,000.

However, the property website said that price rises should remain moderate through the year because of tighter lending criteria making it more difficult to secure a mortgage. It also expects more sellers to put their homes on the market this spring, tempted by the stamp duty holiday extension and surging demand.

“Record low interest rates and the new focus on what your home needs to offer after several lockdowns have led us to the greatest excess of demand over supply in the last ten years. This strong sellers’ market is good news for those who are looking to put their home on the market as the traditional Easter selling season approaches,” said Rightmove’s Tim Bannister.

“Blossoming buyer demand coinciding with blossoming gardens should put a spring in the steps of sellers, and more of them coming to market will provide a much-needed increase in the choice of property for the many who are looking to buy.”

Spring is traditionally the busiest time for the property market and this year is expected to be even busier, with Rightmove recording 40 per cent more traffic to its website than in the same period last year.

Marc von Grundherr, director of Benham and Reeves in London, said: ”We’re fast approaching what is traditionally the busiest time of the year for the UK property market. With the double pronged boost to buyer demand in the form of a stamp duty extension and government guaranteed 95 per cent mortgage products, sellers can ill-afford to sit on their hands with regard to getting their property on the market.”

Nick Leeming, Chairman of Jackson-Stops, said: “Buyers have snapped up stock rapidly across the housing market over the last six months, eroding inventory levels across the country. At the same time, lockdown has meant homeowners have continued to reassess what they want from their properties and this, coupled with the stamp duty holiday, has created a swell in demand. Add to this a renewed appetite for a British bolt hole and this has formed one of the busiest markets we’ve seen for years.”

House prices in London
However, house prices in the capital bucked the national trend, falling by 2.2 per cent year on year.

These price falls were led by more expensive central London boroughs, which have seen demand plummet as international buyers remain trapped abroad, while existing Londoners head further out to leafy suburbs in search of more space. Outer London boroughs accounted for 14 of the 16 where asking prices rose.

The biggest fall in asking prices was in Westminster, were the average price fell by 14.9 per cent to £1.27 million, followed by Camden where house prices dropped 8.0 per cent to £946,000.

Prices rose the most in the outer London boroughs of Croydon (5.7% to £452,000); Barking and Dagenham (5.0% to £330,000); and Bexley (4.8% to £428,000).

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Is the London propery market resilient enough to make it through the next year?

London property market predictions for 2021: six major threats identified from Brexit to a third wave of Covid

It’s hard to remember the last time London’s property market was poised quite so delicately on a knife edge. The capital’s property prices rose by almost 10 per cent in the year to November, according to the Office for National Statistics, while the number of homes sold was up on 2019’s figures.

This year, despite lockdown, demand for homes has held up. Rightmove recently reported its busiest-ever January. But with a series of hurdles to negotiate, is 2021 the right year to buy?

Threat 1: Stamp duty
The tax holiday encouraged buyers with a tax break of up to £15,000. But it is due to end on March 31, despite pressure on Chancellor Rishi Sunak to take a more tapered approach to help the thousands currently mid-purchase.

Winkworth chief executive Dominic Agace thinks the Government will compromise with a “short extension” to allow those already going through the buying process to benefit. “The Government has proven to be very pro-homeownership,” he said.

Threat 2: Mortgages
Lenders have struggled to cope with high demand for mortgages over the past year and thousands of deals are stuck in a massive backlog.

Rightmove says it now takes more than four months for a sale to go through, although choice is improving, crucially for buyers who only have a 10 per cent deposit. Interest rates are holding low and steady. The average interest on a two-year fixed mortgage is 2.52 per cent.

Lawrence Bowles, research analyst at Savills, believes that when the stamp duty holiday ends, first-time buyers will regain their “competitive advantage” because their pre-existing tax breaks will resume. “Banks may be launching more FTB-friendly products now anticipating them to make up a greater proportion of the market in the spring,” he said.

Threat 3: Brexit
Years of post-referendum uncertainty had a massive impact on consumer confidence, and the property market paid the price. Agace feels that now the deed has been done buyers and sellers feel reassured. “There is clearly a worry that the financial services industry will suffer job losses … affecting buyer demand in prime central London,” he said. “So far these concerns have been unfounded.”

Threat 4: Furlough
Buying agent Laura Johnstone, of London Property Search, believes the end of furlough in April will trigger a short-term increase in property for sale, as some of those out of work will have to sell or rent out, increasing supply and lowering prices.

Bowles is more optimistic. His take is that furlough will continue until lockdown restrictions are over. “This will allow businesses to bring their employees back to work,” he said.

In the longer term the Bank of England believes the economy could return to its pre-pandemic size early next year as those consumers who are still working begin spending the £125 billion in lockdown savings.

Threat 5: London exodus
The population of the capital is expected to decline for the first time in more than 30 years, according to PwC. It expects more than 300,000 people to leave London in 2021, and fewer people means less demand. Even with this, the capital’s population will still total 8.7 million. There has also been an exodus of over 1.3 million European workers, with over 700,000 leaving from London, so the true extent of the drop may be much higher.

As London reopens, Agace believes younger buyers and renters will return to the centre to “make up for lost time by enjoying all the bright lights a city has to offer”.

Threat 6: A third wave?
The evolution of the pandemic is, of course, the great unknown. Most of us are pinning our hopes on the vaccination programme to return the world to a relatively normal state by the summer.
But nobody truly knows how things will play out and even in a best-case scenario, the social and economic effects of Covid-19 will be felt for years to come.

On the other hand, the past year has made us all appreciate the importance of where we live more than ever and the deeply imprinted desire for homeownership will continue to drive demand — for those in a financial position to step on to or up the ladder.

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Rishi Sunak is rumoured to be considering an extension to the tax break

Londoners trying to buy a property will save £168 million in tax if the Chancellor decides to extend the looming stamp duty holiday deadline. This equates to an average of £10,514 per household. New research by Rightmove, exclusive to Homes & Property, reveals that between 12,000 and 16,000 buyers could benefit if Rishi Sunak keeps the window open for just another six weeks.

The Chancellor is rumoured to be considering an extension to the tax break – a measure he announced in his emergency Covid-19 July budget last summer to boost demand in the midst of an economic crisis. On the flipside, if Sunak refuses to buckle under mounting pressure from the property industry then these householders – who are desperately trying to exchange and complete on their purchases by March 31 – will lose the stamp duty saving.

On homes worth less than £500,000 stamp duty during this July-to-March window has been completely scrapped. Above the £500,000 threshold it equates to a three per cent reduction.

On average in London buyers will save £10,514 on their move if they beat the deadline or he extends it.

What happens if Rishi Sunak doesn’t extend the stamp duty holiday?
Sellers could be left in the lurch this spring as prospective buyers who have failed to exchange and complete by the end of the stamp duty holiday walk away.

A perfect storm is brewing in the London housing market. Activity is expected to slow when the tax break ends on March 31 just as unemployment is forecast to peak following the end of the furlough scheme in April. In addition, agents warn, some buyers who miss the deadline will pull out.

“Families looking for more space to work-from-home and bigger (or any) garden for their children drove the surge of demand to move house in 2020 and into this year. The stamp duty saving covered the cost of moving for many of these households – who might also be on furlough.

“This incentive will be lost at the end of March, unless the Chancellor decides to extend the scheme, and I expect deals to collapse as a result,” says Becky Fatemi, founder of Rokstone Properties in Marylebone.

Tim Bannister, director at Rightmove agrees: “We know the stamp duty holiday was intended as a temporary stimulus for the market, but the delays we’ve seen in the home-moving process have been through no fault of the buyers and sellers who agreed a sale last year and are now trying to get their deals over the line.
“If there was a six week extension it should give the majority of the sales from last year the chance to complete.”

The tax break has created a log-jam for lenders, solicitors and agents as they try to process offers before March 31. “We should not underestimate the psychological pressure this deadline has put upon buyers and sellers at a time of great stress,” Fatemi adds.

The tax break ‘means more in London’
The tax holiday has been pivotal to propping up the expensive London housing market during the pandemic, explains Lawrence Bowles, analyst at Savills.

“The pressure to complete before the holiday ends is likely to be greatest where average values are around this level, such as in London,” he says.

“The impact of the stamp duty holiday has been more limited in lower value areas such as the North East of England where the stamp liability was low or nil to begin with, or in central London where the saving is small compared to the overall stamp duty bill.”

He argues that given the delays caused by the current lockdown there is “almost a stronger case for extending the deadline than introducing the tax break in the first place.”