The First Homes Scheme: Another Route to Affordable Housing

 

 

Launched in June 2021, the First Homes scheme's first units entering the market through an early delivery project in the West Midlands with local authorities required to take First Homes into account from 28 June 2021.

First Homes, which will be considered to meet the definition of ‘affordable housing’ and, as the Government’s ‘preferred’ discounted market tenure, should account for at least 25% of all affordable housing units delivered by developers. Paragraph 65 of the NPPF seeks for 10% of homes in major developments to be for affordable ownership, and First Homes fall into this category. The minimum requirement of 25% of all affordable homes to be First Homes will need to be written into Local Plans and Neighbourhood Plans, although any local or neighbourhood plan that progressed to the publication stage (or further) by 28th June 2021 will not have to include a policy relating to First Homes until a subsequent update.

The key details of the scheme from a developer perspective are:

a) Discount on market value must be a minimum of 30%, up to a maximum of 50% depending on local circumstances
b) Sold to people meeting the criteria (either keyworkers or local residents)
c) Restriction registered on the title to ensure the discount/limitations in perpetuity, secured by s106 agreement
d) Post-discount price of no more than £250,000 outside of London (or £420,000 in Greater London) – although local authorities can set lower caps if evidenced

What does this mean?

Firstly, the First Homes scheme may result in a reduction in the overall number of residences accessible for shared ownership. The proportion of social rent specified in local affordable housing policy is preserved, although First Homes will now push it to second place. It appears that First Homes is focusing on subsuming shared ownership as a tenure. This will, of course, have an impact on some homeowners and registered providers. Many local governments' affordable housing plans are split roughly 70/30 between social/affordable rent and shared ownership, with the latter now dropping to third place.

Next, there's the problem of value and how it will affect units that are offered for social/affordable rent. To reach the £250,000 cap (excluding London), local authorities are likely to need to use a higher discount percentage in higher-value areas of the country.

For example, average house prices in Broxbourne, at the time of writing, are around £370k. Applying a straight 30% discount to this puts the price around £259k – which is therefore above the threshold. Higher discount requirements will therefore be unavoidable in some areas.

When combined with the overall priority given to First Homes, smaller developments could lose a substantial amount of value, and thus viability, as First Homes will be prioritised over social/affordable rent apartments, affecting the ability to supply this tenure. As a result, a potentially unintended consequence will be a further decline of the affordable/social rent stock.

But there are also benefits from a development viability perspective. These are discounted market housing, rather than a form that will require liaison with registered providers, and the price discount will be a known quantity at the application stage. This reduces uncertainty compared with other tenures, and simplifies the negotiation process. It will also potentially improve the viability of some developments, as first homes units are, in most areas, likely to generate better income than shared ownership units.

Whether you have a site going through planning currently or are in the formative stages of design, if you have any questions about First Homes and the implications for your plan, we can help discuss your options and their impact on viability.

 

 

 

 

 

 

 

 

 

 

 

 

Learn the difference between a conveyancer from a solicitor. Keep on reading this guide to help you through the process of transferring your property.

10 February 2022

Should You Use a Conveyancer or a Solicitor in Real Estate?

A solicitor and a conveyancer will both guide you through the process of transferring property, whether you’re buying or selling real estate. You’ll need either one as soon as you’ve agreed to an offer, and they should oversee the transfer of legal ownership. However, how can you decide which of the two is right for your case?

Conveyancer vs Solicitor

Solicitors and conveyancers are fully regulated, insured and capable of transferring the legal ownership of a real estate you are buying or selling. Both operate to almost identical conveyancing practices and procedures when it comes to handling your property transactions. 

However, there are stark differences between the two, and you’ll likely see a difference in the cost of their services as well. As you choose between the two, here are some things to keep in mind:

• A conveyancer is a specialist property lawyer who focuses on residential property. That means they work on progressing transactions like your case every day.

• A solicitor is a qualified lawyer with extensive training in many aspects of the law. That means they can offer full legal services, including divorce proceedings. They’re more likely to offer you advice out of the usual scope of the process but remain relevant to your case. That, too, means they are pricier.

• Having a solicitor as opposed to a conveyancer to overtake your transfer of real estate ownership is going to cost more.

• Mortgage lenders usually only allow conveyancers or solicitors within their panel. They commonly pay the lender for the privilege of being the point people for such services.

• If you don’t use a conveyancer or solicitor on the lender’s panel, you’ll have to pay for the bank’s representation fees. That fee usually varies from bank to bank but averages at £200.

When to Use a Solicitor Instead of a Conveyancer

If you are dealing with complicated transactions, you’ll be better off with a qualified solicitor than a conveyancer. That is because they can perform more than just conveyancing. For instance, a solicitor can properly handle a boundary dispute or sellers getting divorced because they have knowledge beyond property conveyancing law. 

You can expect the matter to be addressed as best as possible. On the other hand, you can expect a conveyancer to handle your transaction of legal ownership transfer from beginning to end.

The Pros and Cons of Having a Solicitor 

As stated above, solicitors are more expensive than conveyancers, but they do bring something more to the table. Solicitors can handle more complex cases with urgent deadlines, but they sometimes work in small practices and have trouble providing continuity of service when they go on holiday.

Some solicitors may also insist on seeing you in person to confirm you are who you claim to be. That can be inconvenient, but it’s a safety measure they do. 

Conclusion

Choosing which to let overtake your legal transfer of ownership can depend on the complexity of your case. If it’s a straightforward transaction, you can make do with a conveyancer. However, if it involves complex matters, you may want to seek a solicitor instead. Most solicitors are highly specialised in their field, while others do conveyancing part-time.

New Help to Buy scheme set to be introduced from April 2021

 

 

Launched in 2013, the government’s Help to Buy equity loan scheme has enabled thousands of people to purchase a new build home with only a small deposit, with up to 20% of the property sale price covered by a government loan, or 40% in London. To date, over 270,000 homes have been purchased using the scheme, including over 24,000 properties in the capital.

The current scheme allows both first-time buyers and homeowners to benefit, however from April 2021 it will be changing. The launch of the new scheme will result in just first-time buyers being able to apply for the loan, which must be used towards buying a new-build home. The new scheme will also introduce regional price limits.

Do the changes limit the amount of money I can borrow?

First-time buyers will still be able to borrow up to 20% (40% in London) of the cost of a newly built home. The buyer will have to pay a minimum of 5% deposit for the home and then use a help to buy mortgage to fund the remaining cost of the property. The loan is interest-free for the first five years and then interest fees will be added in the years after that period.

What are the regional price limits?

Another new change in the scheme involves the introduction of regional price caps. This means that homes eligible for the scheme will have to be priced below the maximum amounts for each region.

Region	Price cap for Help to Buy homes April 2021 to March 2023
North East	£186,100
North West	£224,400
Yorkshire and The Humber	£228,100
East Midlands	£261,900
West Midlands	£255,600
East of England	£407,000
London	£600,000
South East	£437,000
South West	£349,000

 

Residential Conveyancing: Tips for Ensuring a Quick Process

 

One misconception about the real estate industry is that if both parties find the buyer’s proposal amenable, the title transfer should be quick and easy. Ideally, that would be the case. However, many stumbling blocks can prevent smooth transactions, from potential issues revealed during residential conveyancing searches to either party being slow to respond to requests for information. Here are tips to ensure that your conveyancing proceeds without a hitch.

Know How Much You Can Borrow before Buying

Before you make an offer, you should already know how much you can borrow. Once you have an accepted offer, it will be easy to go through the following steps. Applying for a mortgage comes with complications of its own, so if you can get one in advance, it would make the conveyancing process faster. Having a mortgage secured before buying will also show sellers that you’re serious about coming to an agreement.

Hire an Estate Agent instead of Going Independent

It can be tempting to attempt to purchase your house alone, especially if you’re thinking about how much money you could save. However, good estate agents are worth what you pay—they are efficient and have industry knowledge that will see you through unforeseen situations.

Double-Check Everything You Fill Out

The residential conveyancing process will involve plenty of document exchanges, and the quicker you respond to requests for information, the sooner the solicitors will move to the next stages. However, you have to be sure what you’re writing down is accurate—submit complete forms and be careful to fill them out as accurately as possible. Correcting mistakes will use up time and make the conveyancing even longer.

Hire a Conveyancing Solicitor

Getting a conveyancer is one of the best ways you can ensure that the transaction goes well. If you’re a first-time buyer, having an expert to guide you will help remove the uncertainty of the process. A conveyancer can help you understand aspects about the sale which are unclear to you, and they can take the lead on unfamiliar things. Even if you do a lot of reading, nothing beats having first-hand knowledge of something, and a conveyancing expert would have plenty of experience in transferring properties.

The conveyancer is also crucial in helping speed up the process. They will be aware of red flags and alert you about these—they can even suggest possible ways forward. A good conveyancer will put your needs above everything and keep you updated throughout the conveyancing process. Many of them make it a point to ensure that first-time buyers have a painless, hassle-free experience, so if you have plenty of other commitments or responsibilities, getting a solicitor for the transfer will be a great help.

Conclusion

Whether you’re buying or selling property, you’d need to instruct a conveyancing solicitor to carry out relevant legal processes. Transferring home or land ownership is no walk in the park, even for people who quickly reached an agreement about the sale. Having a solicitor enables you to speed up the process and handle all transactions with confidence and ease.

Conveyancers told to 'get ready' for fee increase

 

HM Land Registry has told conveyancers to 'get ready' for the first fee increase since 2009 in a blog that hints of potentially further changes ahead.

The agency announced last November that fees for registers and transfers of title would rise by up to 21% under changes to come into effect on 31 January.

In the latest blog, chief financial officer Iain Banfield said applications started before 31 January, but submitted on or after this date, will be subject to the new fees, as will applications submitted before 31 January but subsequently cancelled, rejected or resubmitted on or after the 31^st.

Conveyancers are asked to 'get ready' by familiarising themselves with the new fees.

Banfield said: ‘The fee increase allows HM Land Registry to move forward with plans to deliver what customers need – more consistency and speed in service delivery – by investing in both operational capacity and accelerating the digitalisation and automation of services. With this in mind, we are exploring further changes to the fee order, including its structure and simplicity. We are currently engaging as widely as we can before we set out any proposals.’

Will House Prices Keep Rising in 2022

 

 

 

 

 House prices soared in 2021, and with experts unclear as to whether growth will continue in 2022 we examine what you need to know

 

 

House prices could stabilise in 2022 following a red hot year for the housing market in 2021, but many uncertainties lie ahead, experts say. 

The average UK house price rocketed up by 10.2% over the past 12 months to £285,000 in England, according to the Office for National Statistics (ONS). Reasons for this included the stamp duty holiday, a shortage of available properties and the 'race for space' - a desire for homebuyers to live in bigger homes following multiple lockdowns and the move to working from home. 

But, in potentially good news for those buying before renovating a house, some experts project price growth to calm. James Tatch, principal, data and research at UK Finance, told the PA news agency: “We’re seeing a return to a stable path for new lending, for (2022) onwards.”

 

However, David Hannah, principal consultant at Cornerstone Tax, says that many uncertainties in the UK housing market as we head into 2022, with one of the predominant problems being the current supply within the UK housing market.

Read on to see whether experts predict a cooling of the market in 2022, and why housing activity has thrived throughout 2021. 

What to Know About House Prices in 2022

Some experts believe the market will cool in 2022, but the combination of stronger buyer demand coupled with a shortage of available properties means that the market could remain healthy for a while to come. 

"The inbalance between supply and demand has, inevitably, raised the average UK house price," says Hannah. "A solution to the global supply issues will cause an increased supply of new builds, providing the UK housing market with some much-needed extra stock, which should subsequently decrease the average UK house prices, but there are many obstacles facing the UK housing market now which has caused a lot of uncertainty”.

Tom Bill, head of UK residential research at the estate agent Knight Frank, says the Omicron variant could be a factor which affects interest rates and the housing market, which could impact prices. 

“Gravity-defying price growth is the result of low interest rates and tight supply, which are both things we expect to reverse this year, putting downwards pressure on prices," he said.

And Jonathan Hopper, chief executive of Garrington Property Finders, says that the Omicron variant make some homeowners decide to wait before putting their property up for sale, potentially cooling the market.

 

Why Have House Prices Rocketed up? 

House prices soared in 2021, reaching record highs in multiple house price indexes (HPIs).

Annual house price growth rose to 10% in November, up from 9.9% in October, meaning the average UK property value is now £252,687, according to Nationwide's latest house price index. Nationwide added that house prices have risen to almost 15% above average prices in March 2020 before the coronavirus pandemic first hit the UK. 

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Reasons for this surge include the stamp duty holiday extension and the new mortgage guarantee, two measures announced in the Spring Budget 2021 which kept housing market activity buoyant. The 'race for space' - with buyers seeking larger homes - has also been a factor.

But many expected the market to cool once the stamp duty holiday - which helped to fuel about 1.5m house purchases across the UK - ended in June (prior to the tapering effect between July-September). This was evidenced initially by annual house price growth falling to 10% in Nationwide's September house price index (from 11% in August).

However, the stamp duty holiday led to a shortage of available properties and ongoing price rises could be due to this limited supply. 

The impact of soaring inflation and the rise in interest rates in December could yet prove influential too and make it more expensive to buy a house

 

Where Have House Prices Risen the Most?

Mountain Ash in Wales is the place in the UK where house prices rose the most in 2021, according to Rightmove, which experienced a 31% increase in asking prices for homes.

Wales was also this year’s regional asking price hotspot, with average prices up 10.5% in Wales compared to 2020. This was followed by the South West (9.6%) and the South East (9.1%).

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Meanwhile, separate data from a review of Office for National Statistics (ONS) data by HouseholdQuotes, revealed that over the last 20 years, several London boroughs have undergone dramatic increases in house prices, none more so than Kensington and Chelsea, where prices have risen by £863,000. 

Westminster (£600,000), City of London (£540,000) and Camden (£505,000) have also all increased by over £500,000. Corby, meanwhile, has experienced the highest percentage increase in house prices, rising 246.49% between 2000-2020. A home in Corby used to cost £51,950 in 2000 and cost £180,000 in 2020.

Prices Remain Challenging for First-Time Buyers

Growth has exceeded earnings growth over the past year, and the ratio of house prices to average earnings has increased to a record high, Nationwide says.

A 20% deposit is now equivalent to 110% of average income - a record high and up from 102% one year ago. This is proving a particularly changing disparity for first-time buyers.

And Yorkshire Building Society said this week that UK house sales to first-time buyers reached their highest level for 19 years in 2021. 

“Clearly, new buyers have not been deterred by the price of a typical first-time buyer home, which has increased by 9% to £222,997 in the year to October,” the building society said.

 

The Legacy of the Stamp Duty Holiday 

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The stamp duty holiday exempted tax on the first £500,000 of the purchase price between July 2020 and June 2021, and has had a remarkable impact on house prices. 

Zoopla said in its July house price index that it expected prices to edge upwards by 6% in the coming months because of the clamour to make the most the tax break, before eventually easing back to 4-5%. 

Moreover, the stamp duty holiday led to a shortage in supply of properties on the market, with house sales 28% lower in October than a year earlier after a record surge in activity earlier in 2021, according to HM Revenue and Customs.

A tapering effect began on 1 July which kept exemption at double its standard level (£250,000) until the end of September. This dropped back to £125,000 at the beginning of October. 

Russell Galley said in August that "much of the impact from the stamp duty holiday has now left the market", but Jonathan Hopper, CEO of Garrington Property Finders, commented on Halifax's November HPI: “So much for the end of the stamp duty holiday taking the steam out of the market. It’s a month since the tax incentive for buyers was finally withdrawn in England, but you’d scarcely know it. The market is ploughing on regardless."

Our Requirements Have Changed

The pandemic has also been a key driver of house prices, and spending more time indoors has changed the requirements of those looking to buy a home.

Two- and three-bedroom semi-detached houses were snapped up the quickest this year, Rightmove says, with many families searching for more spacious homes, following the shift to working from home. 

Nick Barnes, head of research at estate agency chain Chestertons, said in September: “We expect activity to pick up as there is still substantial unsatisfied demand for spacious homes, mortgage offerings remain attractive and buyers are keen to get their lives back on track post-lockdown.”

 

A Nationwide study from earlier this year revealed that of those moving or considering a move, around a third (33%) are looking to move to a different area, while nearly 30% are doing so to access a garden or outdoor space more easily.

Greater Demand for Rural Locations

The pandemic has also increased our desire for rural living. A recent study by Moveable that 50% of Londoners no longer have the desire to buy a home in the capital, with working from home continuing for many. 

Their research also discovered that 41% of home movers no longer consider commute times when searching for a property, and 41% of home owners in cities plan to move out in the next year to buy a house in the country.

Anthony Codling, an independent housing analyst, adds: “Large numbers continue to look for more space to facilitate working from home and countless others are looking for additional homes to accommodate the emerging hybrid working from home model of two to three days in the urban office and two to three days in the rural or coastal idyll. 

"Meanwhile, the number of homes for sale is not meeting demand and the outlook for prices is up not down.”

 

 

 

 

What You Should Know About Restrictive Covenants

 

 

 

 

 

 

 

 

 

 

 

When you are buying a property, you may encounter what is known as a restrictive covenant. This is a written binding condition included in a property’s deed or contract by a seller. This dictates what a homeowner can or cannot do with the property under specific circumstances. For instance, a restrictive covenant can prevent new owners from altering the architectural style of the building or keep them from building new structures on a specific part of the land. It could also state that the new owner cannot use the property for trade or other businesses. 

In this post, Conveyancing Expert, a trusted conveyancer in Manchester discusses all you need to know about restrictive covenants:

Why Are Restrictive Covenants Used?

In most cases, they are established to maintain certain standards for residents in a particular community. Housing developers usually add restrictive covenants to transfer deeds so that owners won’t do anything that could possibly affect the neighbourhood negatively or break from the desired “uniformity” of the area.

The restrictions in such cases are often minor, like the prohibition of installing satellite dishes, parking a boat or a caravan in front of the house, keeping livestock in the yard, painting the house a loud colour, or others. 

Land owners may also create restrictive covenants on the lands they are selling to protect their value and minimise damage. 

Are Restrictive Covenants Only Applicable to New Builds?

No. They can be placed even on older properties. Moreover, the age of the covenant won’t have any effects on its validity. There are cases, though, where really old covenants are accepted as unenforceable due to the fact that its original builder cannot be traced or because of ambiguous wordings that make it hard to apply. It may also be deemed void if the covenant is historically obsolete. 

How Will a Restrictive Covenant Affect You?

What you should know about restrictive covenant is that it is applicable to all future purchasers of the property and not just the first or original buyer. They call it “running with the land”. That’s why it is important for you as a buyer to discuss this with your conveyancing solicitor so they can examine the deeds to see if there are any covenants before you sign anything. Remember that once signed, you will already be accountable for any breaches that you incur. 

Additionally, you should check where the ‘benefit of the covenant’ is located and whether or not it has passed onto another person or company. This is because they will be responsible for the enforcement of the restriction and answering queries related to the covenant. 

As a buyer, you should also determine if the property’s value will be affected in the future due to the provisions of a covenant. There are cases in which mortgage lenders refuse to approve loans on properties where a covenant is determined to potentially affect their saleability in the future. In such cases, you can contact the successor in title and current vendor and tell them that you cannot proceed due to the covenant. It’s possible for them to remove the restriction, especially if it’s evident that the covenant is going to affect their ability to sell the property, too. 

Conclusion

These are just some of the basics that you need to understand about restrictive covenants. As you can see it can be one of the factors that can make purchasing a property more complicated, and definitely among the reasons you need quality conveyancing services. A seasoned conveyancer can review deeds to determine if there are any covenants that you should be aware of and give you advice regarding the best steps that you should take.