The Bank currently serves over 23,000 customers with total lending balances of £3.7bn.

Tesco Bank ceases mortgage lending

The Bank says it will consider the complete transfer of related balances and ongoing administration of relevant accounts.

The Bank, which has offered mortgages since 2012, currently serves over 23,000 customers with total lending balances of £3.7bn.

Gerry Mallon, chief executive of Tesco Bank, said: “In recent years, challenging market conditions have limited profitable growth opportunities. Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.

“To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer. We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio. Our priority in any sale, is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.”

Source: www.financialreporter.co.uk

Explore the reasons why people rent instead of buying.

 
Affordability

As you would expect, affordability is a major factor. And indeed, most respondents said they were renting because they simply didn’t have the means to buy their own property. According to the numbers, 56.30% said that couldn’t afford a deposit and 29% said that they were unable to qualify for a mortgage.

Of those who are struggling to save for a deposit, 64.40% could only rely on their own funds for a deposit and only 22.45% said that they were actively saving up to buy a house.

When looking at age groups, the survey shows that those aged between 35 and 44 were struggling the most with buying their own home. Out of everyone surveyed in this cohort, 64.23% said they couldn’t afford a deposit, which was the highest percentage out of all cohorts surveyed.

This was closely followed by respondents aged between 25 and 34 (62.96%), however, this group had the most respondents saying that they were actively saving for a deposit (34.76%).

Lifestyle

With 26.10% of respondents saying they rent because it suits their lifestyle, the convenience of the sector is clearly important. This was especially evident with the oldest and youngest age groups surveyed.

Out of all respondents, those aged 18-24 mostly said that renting suited their lifestyle (47.15%) and that they didn’t want to be tied down to one location (22.05%).

Respondents aged 55 and over had the second highest number of respondents saying that renting suited their lifestyle (34.66%), they also were the most likely to say that they didn’t want the commitment of maintaining a property (24.55%) and paying a mortgage (26.71%).

Younger respondents were holding off buying a property until they found a suitable home; those aged 18 to 24 were most likely to say that they are yet to find the right home to buy (16.73%), this was followed by respondents aged 25 to 34 (11.82%).

Conclusion

“The survey has produced some extremely interesting results. Previous surveys have always seemed to indicate that millennials are the main group that are struggling to get on the housing ladder, backing up current industry data.

However, it now appears that this is increasingly becoming an issue for slightly older renters as well. It’s clear that many tenants are having to rent on a long-term basis because they simply cannot afford to save up for a deposit, alongside their regular monthly outgoings like rent and other expenses. It’s also fascinating to see that a lot of people are now renting out of choice rather than necessity. It indicates that renting is more suitable for the current market and it will be interesting to see if this trend continues.”

Source: www.propertyreporter.co.uk

Under the changes, advisers will be required to explain why they didn’t recommend the cheapest mortgage.

The FCA is planning changes to its mortgage sales rules to encourage consumer choice and provide clarity on the boundary between execution-only sales channels and mortgage advice.

Under the changes, if a mortgage adviser recommends a product which is not the cheapest, they will be required to explain why the cheaper mortgage has not been recommended.

The FCA said it has identified a number of ways its advice rules are acting as a barrier to the development of new tools to help customers choose and buy a mortgage.

As a result, the changes aim to make it clear that tools which allow customers to search and filter available mortgages are not necessarily giving advice. It will also be clearer that some forms of interaction, such as firms helping consumers with their applications, do not require advice.

Additionally, the FCA is also making changes to the standards around execution only policies.

The proposals are one part of a package of remedies from the Mortgages Market Study, published earlier this year, which aims to encourage innovation and make it easier for customers to find the right mortgage.

The FCA is consulting on the new rules until the 7th of July and is expected to publish its feedback and final rules around the end of the year.

Christopher Woolard, executive director of strategy and competition at the FCA, said: “The mortgage market is working well for most customers but we have identified some areas where our rules are acting as a barrier to innovation. The changes we’ve announced today will allow firms to develop products and services which can truly meet the needs of customers.”

Jackie Bennett, director of mortgages at UK Finance, commented: “The FCA’s proposals provide helpful clarity on the boundary between execution-only sales channels and mortgage advice.

“This should help ensure that firms can easily provide factual information to borrowers who opt to go through the execution-only route, helping them to choose or switch product quickly and efficiently. It will also support continued innovation, particularly in digital channels.

“The overwhelming majority of new loans are likely to continue being sold under an advised process, during which customers take part in a lengthy interview with the onus being on the lender or adviser to ensure that the mortgage is suitable for the borrower’s needs.

“UK Finance will be responding to this consultation in due course and will continue working with the FCA to make it easier for customers to choose the right product for them.”

Nicola Firth, founder and CEO of Knowledge Bank, added: “We’ve always understood that brokers are not always able to recommend the cheapest rate to customers and that depending on criteria, it can often be a lender who is further down the sourcing tables that is a better fit.

“For this reason we give brokers the ability to produce their own case specific ‘Evidence of Research’ based on the criteria. This is date and time stamped with the broker’s and customer’s details on and which sits alongside their product sourcing results to show the bigger picture of why that recommendation was made to the customer.

“Compliance managers have told us that in the event of a complaint, there is a big difference between ‘documenting’ and ‘evidencing’ research. We have been pleased to be involved in the FCA’s recent study and understand that they welcome the innovation we have brought to the intermediary mortgage market with Knowledge Bank.”

Source: www.financialreporter.co.uk

Newham is London’s most crowded borough with a population of just under 350,000 people reliant on just 112,628 homes.

New research has identified which London boroughs are home to the highest and lowest percentage of homes in London, as well as which has the highest and lowest ratio when it comes to homes per capita.

The research, by flatshare platform Ideal Flatmate, found that the City of London has the lowest amount of homes with just 0.18% of all London properties located within its boundaries.

Kingston is home to the second lowest with just 1.9% of the capital’s total homes in the borough, with Barking and Dagenham, Sutton and Merton also amongst some of the lowest where volumes of housing are concerned.

However, while the amount of homes is one thing, the population of those reliant on housing in each borough is a main contributing factor to how crowded these local London property markets are.

With this considered, Newham is London’s most crowded borough with a population of just under 350,000 people reliant on just 112,628 dwellings in the borough, resulting in a dwellings per capita ratio of just 0.33 – in other words there roughly just one-third of a property available for every one person that resides in Newham.

Redbridge was the next most crowded borough with a dwellings per capita ratio of 3.4, with Barking and Dagenham, Brent, Harrow, Hillingdon, Hounslow, Waltham Forest, Enfield, Ealing, Kingston, Barnet and Tower Hamlets all home to a dwellings per capita ratio of less than 0.4.

While prime central London is used to topping tables around affordability, the higher price tags do mean they are some of the least crowded boroughs in London, with Kensington and Chelsea (0.56) and Westminster (0.51) home to a ratio of over half a property per person living in the borough. Hammersmith and Fulham, Wandsworth and Islington are also amongst some of the capita’s roomiest boroughs where property and population are concerned.

Co-founder of Ideal Flatmate, Tom Gatzen, commented: “There’s obviously a clear correlation between the amount you pay either to buy or rent and the space you get for your money, but for those of us that don’t live in the high-end bliss of prime central London, it’s actually quite dire reading when it comes to the ratio of property available to people that need a roof over their head.

“It’s no revelation that we aren’t building enough homes and while actual space is part of the issue in areas such as London, this research highlights just how overcrowded things are becoming in the capital.

“No wonder then, that we’ve seen an increase in the acceptance of shared living, particularly in our major cities. While cost saving is the driving factor due to the price of renting or buying, coupled with the cost of living in general, there simply aren’t enough homes available to house everyone individually even if we wanted to.

“While we’re big fans of co-living and the positives it brings, failure to address this lack of stock is going to see both house prices and the cost of renting continue to spiral out of reach for the average tenant or homebuyer.”

Source: www.propertyreporter.co.uk

The UK Government has announced on Monday  plans to consult on new legislation to abolish Section 21 evictions – so called ‘no-fault’ evictions in England. This will effectively create open-ended tenancies, and lead to what the Government believe will be more effective means of getting their property back when they genuinely need to do so.

The home of some of London’s biggest financial institutions

The latest data from Zoopla has revealed that the home of some of London’s biggest financial institutions and surrounding areas are the capital’s most searched for rental locations.

Zoopla analysed property search data from the past 12 months to reveal the most sought-after areas for a rental home in London. The ‘W2’ postcode district, which encompasses Paddington and Bayswater, was ranked the second most searched for location for a rental home in the capital whilst the postcode area including the South Bank, Bankside, Bermondsey & Waterloo (SE1) came third. Battersea, which has been a hotspot for build to rent homes in the last three years, squeezed its way on to the hotspot list, featuring as the 10th most requested London location for a rental home.

Zoopla has also segmented the most popular rental searches by property type and number of bedrooms to reveal that E14 again topped the list for tenants looking for a one or two bedroom apartment in London. Londoners looking for larger properties to rent showed a strong preference for London’s outer zones, with eight of the ten most popular areas for searches on three and four bedroom houses located in the South West and North West of London.

Annabel Dixon, spokesperson for Zoopla, comments: “It’s perhaps no surprise that Canary Wharf and the Isle of Dogs has been highlighted as a popular choice for London renters. This area has long been associated with gleaming office towers, but it is now buzzing with new restaurants, bars, shops and homes, transforming it into a sought-after destination to live as well as work.

Renters searching for larger family homes in the capital showed a clear preference for the suburbs, with Colindale, Hendon and Kingsbury the most searched locations for three and four bedroom houses. These areas are ideal for young families looking for space to grow, with leafy surroundings and several well-regarded schools nearby.

We have more London rental listings on Zoopla than anyone else. So if you’re a renter searching for a home in the capital, our property portal is a great place to find it.”

Source: www.propertyreporter.co.uk

UK Cities House Price Index

◼ UK city house price inflation +2.8% – all cities recording positive house price growth.
◼ London growth rate edges higher to 0.4% – there has been a decline in the number of London postcodes registering price falls since October 2018.
◼ Regional cities continue to post above average price growth but there are signs that the rate of price inflation will slow further in the months ahead.
◼ Housing transactions and mortgage approvals holding up despite Brexit uncertainty.

All cities record price rises for first time in 3.5 years
The latest UK cities house price index reveals that average prices increased +2.8% over the last year. Annual price inflation ranges between +6.8% in Leicester to +0.2% in Cambridge  This is the first time annual price growth has been positive across all 20 cities for 3.5 years (August 2015), primarily a result of growth finally turning positive in Aberdeen.

Annual growth rate edges higher in London

The annual rate of growth in London has increased slightly to +0.4%. While market conditions remain weak, there are signs of a pick-up in demand following a 3-year repricing of London homes.
This repricing process has come in two forms –1) absolute price falls which have been concentrated in higher value markets, and 2) a widening in the discount between asking and achieved prices, with the largest discounts in inner London.

Market decline in London postcodes with price falls

Our granular house price indices for London reveal that the proportion of postcodes registering price falls is starting to reduce. The latest data reveals that prices are falling across 55% of London postcodes, down from almost 70% last October.
The rate at which prices are falling in these markets is relatively low – 0% to -5%. Prices continue to increase in 45% of London City postcodes, typically lower value, more affordable areas in outer London.

No rebound in prices but a positive for market activity

Buyers who have delayed purchases and stood on the side-lines since 2015, are starting to see greater value for money, perhaps seeking out buying opportunities while Brexit uncertainty impacts market sentiment.
This is supported by a willingness of sellers to be more realistic on pricing and accept offers from buyers. While we do not believe London prices will rebound, the closer alignment of buyer and seller expectations is a positive for market activity and sales volumes, which are still 25% lower than in 2016. We talk specifically on the ‘Brexit impact’ later in this report.

Prices up 17% in two regional cities since Brexit vote

While London has registered weak growth, regional cities outside southern England have recorded above average price inflation over the last 3 years. This is a result of better affordability and rising employment which has boosted demand.
Leicester and Manchester have recorded price growth of 17% since the Brexit vote in June 2016, followed by a 16% increase in Birmingham. The latest index finds prices rising by 5% or more in seven cities led by Leicester, Manchester and Glasgow.

Slower growth in regional cities over 2019

These trends are all part and parcel of the unfolding housing cycle. However, house prices cannot keep rising ahead of earnings indefinitely. The rate of price inflation in regional cities has started to moderate. We believe this will continue over the remainder of 2019.

Birmingham and Manchester start to lose momentum

For example, our granular price indices for Birmingham and Manchester, reveal a significant increase in the proportion of postcodes registering growth of 0% to 5% and fewer areas recording growth over 5% per annum. This is a result of growing affordability pressures as well as increased uncertainty.
We expect prices to keep rising in these cities but at a slower rate, closer to earnings growth. This follows the pattern recorded in cities such as Bristol and Bournemouth in southern England.
Brexit impact on the housing market?
Brexit uncertainty is often cited as the cause of weaker house price growth over the last 12-18 months. We believe it is more complex than that and see Brexit uncertainty as a compounding factor in markets where fundamentals have weakened.
Price growth is just one measure of relative market strength. Levels of housing transactions are another important measure for businesses operating in the market. The willingness and ability of households to move home underpins revenues and business plans.
Data on transactions remains resilient with no obvious Brexit impact at a national level. Transaction volumes over 2018 remained in line with the 5-year average. The same is true for mortgage approvals for home purchase. There has been no material drop in activity over 2018H2 as the Brexit debate has heated up. The very latest data from HMRC shows that housing transactions have increased slightly in the first 2 months of 2019.

Source: Zoopla Research

The Home (Fitness for Human Habitation) Act 2018 finished its parliamentary journey in December 2018. From 20th of March all social and private landlords, including letting agents, in England will be required to comply.

Homes Act comes into force on 20 March 2019