Four in 10 renters eye moving back in with parents

Four in 10 renters eye moving back in with parents

Four in 10 renters say that they would consider moving back in with their parents to save a big-enough deposit to get on the housing ladder, according to a survey of 2,000 tenants carried out by Skipton Building Society.

While 52% of those considering it feel it is a move backwards, 91% said it would be a short-term sacrifice for a long-term gain.

Around a fifth of those prepared to move back home estimate they will have enough money saved for a deposit within a year.

Data from the Office for National Statistics (ONS) shows that annual private rental prices increased by 6.1% in England, 7% in Wales and 6.8% in Scotland in the 12 months to January 2024.

In March, the ONS reported that average rents in the UK had jumped 9% year-on-year.

Within England, London had the highest annual percentage change in private rental prices at 6.9%, while the North East saw the lowest at 4.7%.

 

Not feasible for all

But not all renters polled had the option to move back in with parents, with tenants citing a lack of space or distance from work as reasons a move home was not feasible.

Skipton’s research follows rental data from Hamptons, part of the Skipton Group, that revealed the average rent paid by someone leaving the parental home passed £1,000 per month for the first time in 2023.

The average would-be tenant who didn’t fly the nest would have the opportunity to save up to £12,290 if they could live rent-free with parents for a year.

With rising rents and the cost of living, the tenants polled are currently only able to save £187 per month towards their first house deposits – but if they were to move back in with parents, they could put as much as £808 away monthly, according to the society.

And with 20% feeling it will take them more than five years to save for their first home while renting, 63% admit their family members are unable to contribute to their savings.

Jennifer Lloyd, head of mortgage products and proposition at Skipton Building Society, said: “People trapped renting is one of the biggest housing challenges we face across the country, which is having a massive impact on the fabric of our society.

“With escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit, it’s making it almost impossible for people to get on to the property ladder, so it’s no wonder we are seeing a rise in the number of tenants considering a move back home.”

Sunak plans to scrap stamp duty for first-time buyers and bring back Help to Buy

Sunak plans to scrap stamp duty for first-time buyers and bring back Help to Buy

Sunak (pictured) laid out his commitments to aspiring homeowners during the launch of the Conservative Party Manifesto from Silverstone in Northamptonshire.

The temporary change to first-time buyer relief – introduced by the Tories in September 2022 – that saw the nil-rate threshold lifted from £300,000 to £425,000 will remain permanently in place, he said, if the party is re-elected in July.

Sunak also promised to launch a “new and improved” Help to Buy scheme that would provide first-time buyers with a 20% equity loan to put towards the purchase of a new-build home if they contribute a 5% deposit.

In the manifesto, Sunak wrote: “First-time buyers will be able to get on to the housing ladder with a 5% deposit on interest terms they can afford.”

Landlords were also offered some tax relief. The Prime Minister has pledged to introduce a two-year temporary capital gains tax (CGT) relief for landlords who sell their properties to the existing tenants.

 

Homebuilding and continuation of housing market schemes

A commitment to build more homes than had been delivered in the last Parliament was also made. Sunak said the Conservatives had delivered one million new homes over the past five years and, if re-elected, the party would go further by bringing forward 1.6 million more homes.

This would be done by speeding up planning on brownfield land in the country’s inner cities and scrapping EU laws.

Other pledges to continue existing housing market schemes included continuing with the Mortgage Guarantee Scheme, protecting Right to Buy discounts, and delivering the court reforms necessary to abolish Section 21 evictions.

Outside of housing, Sunak’s headline commitments were to apply a further 2p cut to employee National Insurance by April 2027 with a promise not to raise income taxes. The manifesto also promises to scrap the main rate of self-employed National Insurance by the end of the Parliament.

Housing minister Gove joins raft of Tory MPs not standing in July election

Housing minister Gove joins raft of Tory MPs not standing in July election

Gove (pictured) wrote his letter of resignation to the chair of the Surrey Heath Conservatives on Friday, as other well-known Tory MPs also announced their plans not to stand as MPs in the upcoming election.

The count of Conservative MPs not standing is now close to 80, according to The Telegraph. Among the names are Andrea Leadsom of South Northamptonshire, Matt Hancock of West Suffolk, John Redwood of Wokingham, Sajid Javid of Bromsgrove and Kwasi Kwarteng of Spelthorne.

Gove’s political career spans almost two decades, after becoming the MP for Surrey Heath in 2005 and holding prominent offices such as education secretary, minister for the cabinet office, Secretary of State for environment, food and rural affairs and, more recently, housing minister.

Gove has served in the role since October 2022, having previously held the position from September 2021 to July 2022.

In his resignation letter, he wrote: “No one in politics is a conscript. We are volunteers who willingly choose our fate. And the chance to serve is wonderful. But there comes a moment when you know it is time to leave. That a new generation should lead.”

Writing about his time as the Secretary of State for Levelling Up, Housing and Communities, Gove said he was pleased to have introduced the most wide-ranging set of leasehold and social housing reforms in a generation. He added that he was “glad” to have legislated and acted to make buildings safer in the wake of the Grenfell tragedy.

Two-thirds of FTBs do not understand how shared ownership works

Two-thirds of FTBs do not understand how shared ownership works

According to a survey by TML, gaps in first-time buyers’ knowledge about shared ownership, which is an affordable housing scheme, could be preventing them from getting on to the property ladder.

 

Crossed wires

Who you are sharing the ownership of your home with caused the greatest confusion among buyers.

Some 17% of first-time buyers thought that shared ownership meant co-owning with your family. A further 14% said that shared ownership meant sharing responsibility of being a landlord on a property. Another 8% believed it meant owning with a stranger, and a further 7% identified it as owning with a friend.

Some 14% said they didn’t understand shared ownership at all, and another 5% said it meant owning a few rooms in a house.

With 65% either defining shared ownership incorrectly or being unable to do so at all, first-time buyers could be missing out on the opportunity of homeownership, says TML.

 

Affordability challenges

Research from the Building Societies Association found that, over the last 70 years, it has never been a more expensive time to be a first-time buyer than now.

Affordability challenges, high house prices and the rising cost of living have left first-time buyers with significant barriers to getting on the ladder. The association has called for radical support from the government to support first-time buyers.

Louise Apollonio, head of corporate accounts at TML, said: “The first hurdle to get onto the ladder is raising a deposit, which is particularly difficult for those renting who are also dealing with steep rental price rises. However, that doesn’t mean that they wouldn’t be good candidates for owning a property. Shared ownership provides an opportunity for first-time buyers to get a step on to the ladder without the need for a huge deposit, allowing them to slowly work up to total ownership of the property.

“We believe that everyone deserves a place that they call home, and are committed to ensuring that our lending practices support our end customers’ real-life situations.”

Dudley BS opens up large mortgage range to whole market

Dudley BS opens up large mortgage range to whole market

Loan sizes range from £1m to £2.5m and are available for both purchases and remortgages.

Rates start at 6.19% on the discount for term large loan products, which go up to 75% loan to value (LTV) on a repayment basis and 70% LTV for interest-only.

The large loan mortgages are also available for expats, where one or more of the applicants are residing outside of the UK, and the property will be lived in by the borrower’s family as well as by the borrower themselves when in the country.

Income derived from a wide range of countries and in over 160 currencies is accepted by the society.

For expats, rates start at 6.49% on the expat residential discount for term large loan products, which also go up to 75% LTV on a repayment basis and 70% for interest-only.

Robert Oliver (pictured), distribution director at Dudley Building Society, said: “We are thrilled to open up our large loan mortgages to the wider intermediary market, giving all brokers access to our products.

“Our large loan mortgages are a perfect fit for high-earning individuals who require a personalised and flexible approach from their mortgage lender.”

Last week, Dudley Building Society reduced select residential fixed mortgage rates for both new and existing borrowers.

More2life’s Flexi Payment Term deal undergoes criteria changes in trial

More2life’s Flexi Payment Term deal undergoes criteria changes in trial

Equity release brokers quizzed Waugh on when the Flexi Payment Term lifetime mortgage product would be available to the wider market, with More2life having announced a pilot launch in February.

Waugh said the product had attracted a lot of feedback from brokers in the trial, and as a result, the minimum and maximum ages would be improved. Once these final changes have been made, the product will be rolled out to the wider market.

“The testing we have done has given us an overwhelming level of feedback, not all of it good,” said Waugh, addressing a room of equity release professionals at the Equity Release Council’s (ERC’s) summit. “And that, in many respects, is why we wanted to launch the way we did. One of the [points] we got was that it needed to start younger.”

The minimum age will be lowered from 55 to 50 years old.

Waugh added: “At the moment, that product is restricted to a [maximum] age of 67. That needs to go higher. And I think that’s what we’ll see as we go through this year, younger and older ages, which will provide a much better LTV spectrum and [open up] a much bigger population of customers that this is the right solution for. We’re not there yet, but we’re starting in a place we’re comfortable in and we’ll build out from there.”

More2life is looking at standard mortgage platforms to see if it can display later life products side by side with traditional mortgages.

“We have to break down the old hierarchy, the old ways of doing things, because the world is changing so much so fast,” he added. “I don’t think we’ve all caught up as much as we need to. We’ve got one product out there to a pilot list of firms, that’s not enough. My whole agenda this year is product innovation and new products. But it’s also about going out and talking to distributors.”

Waugh also stressed the importance of assessing how much a borrower can afford to pay towards interest each month.

“Affordability-led advice is crucial in a high-interest-rate environment,” he added.

Last month, More2life increased the maximum loan to value (LTV) across all age bands in its Flexi Choice range for equity release deals.

Equity Release Council chair ‘cautiously optimistic about future’

Equity Release Council chair ‘cautiously optimistic about future’

David Burrowes (pictured), chair of the council, said the Q1 reduction in equity release rates, strong economic growth relative to previous quarters, higher loan to values (LTVs) and a drop in the rate of inflation were all good news for the sector.

“The Bank of England rate should eventually follow, so that much-needed confidence returns,” he said. “So I do think we can be cautiously optimistic about the future.”

Despite his positivity, Burrowes set the scene for a challenging year and described market conditions as “tough”.

In 2022, the sector advanced £6.2bn of lending, which fell to £2.bn in 2023.

However, Burrowes said challenges could be turned into opportunities for the later life lending market.

“This [summit] is the big one, the one that sets out our stall, the one that sets a clear vision for our future, and a clear vision we must have,” he said.

“And why is that? Because now and in the very near future, our industry is going to be faced with a set of challenges, the like[s] of which we’ve not seen for many years. Our job at the council is to work with you and others to ensure that those challenges become opportunities.

“Opportunities to provide current and potential customers with products and services [that] will transform their lives for the better; opportunities to grow our market and to transform later life finances not only for this generation of older people but for many generations to come, and opportunities to work with a government of any colour, and our friends the regulators to put a legislative framework in place [that] helps us to deliver this.”

He added: “I don’t want to overplay the signs of recovery, but a recovery will come.”

Equity release penalties too high and complex in Consumer Duty world – Daley

Equity release penalties too high and complex in Consumer Duty world – Daley

James Daley, managing director of consumer champion website Fairer Finance, said the equity release market should “embrace” the new set of regulations that would drive firms to “do the right thing”.

Consumer Duty, said Daley, asked challenging questions of equity release firms’ business models and the way they did business.

Speaking during a panel session at the Equity Release Summit in Westminster, he said: “You have to step out of the way you have done things for the past 20 years.”

He added: “Gilt-based [ERCs] are a pet hate of mine. They still exist. I’m delighted to see they are starting to disappear, but they are still there in the market and I don’t think there is any way in the Consumer Duty world that you are going to be able to make [gilt-linked ERCs] stack up [when] meeting the customer understanding test of Consumer Duty. And I still think some of the other ERCs are a bit high where we have moved to flat fees.”

Daley also wants to see providers honestly disclose how much money they are making from a transaction from the margin they make to the commissions paid along the supply chain.

“The fair value reports we’ve seen from equity release providers are not honest enough at this stage,” he said. “How much money are you making? Let’s not just say it’s really complicated, we can’t put a number on it. Somewhere in an organisation that is going to be very clear.”

Daley said firms need to think about where they are making the most money and whether customers are still getting fantastic value.

“Where is it right to sharpen up our offer to give the best outcomes for our customers?” he added.

In response to an earlier point made by panellist Henry Tapper, chief executive of AgeWage, who told delegates: “don’t worry about high interest rates, worry about your customers because they need money,” Daley said high interest rates posed a challenge for the sector.

“The value is very different for customers in a 5% interest rate environment versus a 0% interest rate environment,” he said. “You’re going to rip through your equity twice as quickly. Customers should be encouraged if they can to pay some of that interest down to try and preserve more of that wealth.”

In April, Fairer Finance launched an equity release handbook in conjunction with the Equity Release Council (ERC).

Regulators will be less intrusive if equity release ‘keeps house in order’ – Pond

Regulators will be less intrusive if equity release ‘keeps house in order’ – Pond

Speaking at the Equity Release Council Summit, Pond, a former pensions minister and chair of the council’s consumer council, said: “There is understandable anxiety that statutory regulation of financial services may become more burdensome with a change of administration on July 5.

“I talk about administration because, whether or not it’s a change of governing party, we will nevertheless have a new range of ministers, officials, from whichever party holds the House of Commons majority. But I don’t think it’s inevitable that we should have more arduous regulation.”

Pond’s recent discussions with regulators signified a lack of enthusiasm to heap regulation onto the later life lending market.

He was told that if the equity release sector could reassure them it would “keep its house in order” and the sector ensures it will provide the best outcomes for consumers, the regulators can be “less intrusive”.

Addressing an audience of close to 300 delegates in Westminster, Pond said that the best way to mitigate the risk of further increased intervention was to demonstrate that tougher statutory rules are unnecessary in a sector that already effectively regulates itself.

He added: “I think it’s fair to say [the standards] are now recognised by regulators, by policymakers and by many in the consumer community as being the gold standard for property-based lending in later life.”

However, Pond said that, following the introduction of Consumer Duty, the council’s standards must continue to evolve.

Livemore cuts mortgage and equity release rates

Livemore cuts mortgage and equity release rates

The cuts span Livemore’s retirement interest-only (RIO), standard interest-only and standard capital and interest mortgage ranges.

The company has also reduced rates on its Lite, Standard and Property+ equity release mortgages.

Rates are reduced by 0.54% on its five-year Livemore 1 standard capital and interest and standard interest-only products. They now start at 5.99%. The reduction applies to the 60% and 70% loan-to-value (LTV) tier and the fee-assisted range.

On the five-year Livemore 1 RIO products, the rate is down by 0.5%, now starting at 6.18%. This applies to the 60% and 75% LTV tier and the fee-assisted range.

For its equity release products, rates are down by 0.58% and start from 6.11%.

Tim Wellard (pictured), senior proposition manager at Livemore, said: “The new rates offer customers more competitive rates, as we continue to support customers wanting to solve their later life lending challenges.”

Earlier this week, the lender announced a 100% debt consolidation remortgage.