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The Help to Buy scheme could be scaled back amid concerns Britain’s property market is in danger of overheating, it has been suggested.
Chancellor George Osborne said the Bank of England was vigilant about house price rises and would intervene if necessary.
Possible action could include reigning back the Government’s Help to Buy scheme, which enables people with only a small deposit to take out a mortgage.
The Chancellor’s comments come after the Organisation for Economic Co-operation and Development warned that the booming property market could threaten the UK’s economic recovery.
In a report it said Britain should introduce measures to address the risks of “excessive house price inflation”, as property values now “significantly exceed long-term averages relative to rents and household incomes.”
It added that access to the Help to Buy scheme should be tightened, and buyers should be required to put down bigger deposits for mortgages.
In response to the report, Osborne said: “I’ve said we should be vigilant about the housing market and this Government has given the Bank of England the powers, the tools to do that in an independent way.”
He added that the Bank of England had the tools and independence to do what it felt needed to be done to help to contribute to building a resilient economy.
The Help to Buy scheme enables people buying their first home or trading up the property ladder to purchase a property worth up to £600,000 with a deposit of just 5 per cent.
The Government will then either top up the 5 per cent deposit with 20 per cent of the property’s value or it will offer lenders advancing high loan-to-value mortgages a guarantee on a portion of the debt.
The £600,000 upper limit of the scheme has been criticised as being too high, but recent figures showed that the average cost of a home bought under the scheme was just £148,000.
Concerns that a bubble may be building up in the UK property market follow a run of positive data on house prices.
Nationwide recently reported that property values had risen by 10.9 per cent during the past year – the first time annual house price inflation has been in double digits since April 2010.
Figures from the Land Registry have also shown that average property prices in London have already passed their pre-correction peak.
Recent gains have left the typical cost of a home in England standing at £262,770, according to Zoopla.
But data on the number of mortgages approved for house purchase suggest the market may be beginning to moderate, with the Bank of England reporting a dip in pipeline loans for people buying a home for the second consecutive month during March.
New regulations were also introduced at the end of last month to ensure homeowners are not taking on too much debt.
Under the Mortgage Market Review, lenders will be required to carry out tough affordability checks, including making sure borrowers will continue to be able to meet their repayments when interest rates rise.
We all have very different tastes, styles and preferences, so it’s better to aim for the middle ground on interior design when you’re aiming to sell your home, writes Anna Hart.
What one of us considers absolutely gorgeous, the height of style and the veritable bee’s knees, another person may think is hideous, trashy and would never choose it in a million lifetimes. In short, we all love and hate very different things, and you can’t predict your buyers’ tastes.
As such, if you’d like a sale at a decent price and within a reasonably short timescale, then I suggest that love is not what you should be aiming for.
Why? Because it’s so common for one person to hate what another person loves.
Safer all round is to aim for the middle ground. A style that most people wouldn’t get overly excited about, but also is unlikely to be despised. It’s the Switzerland of interior design – yes, I’m talking about neutral décor.
But don’t for a second think that I’m going to tell you to paint all your walls magnolia. Magnolia is now such an over-used cliché that instead of portraying a classy neutral vibe, it’s synonymous with basic, studenty, amateur, and value. It gives the impression of not being bothered or able to come up with anything more creative or inspiring. Magnolia is total dullsville, and while it might not be best to aim for love, you certainly don’t want to end up with mediocrity.
Anna’s Top 5 Tips for Fantastic Neutral Sale Décor
- Keep walls, ceilings and floors single-coloured and pattern-free. Unless you’re a fab designer, ceilings should be white and woodwork should either be white or a natural wood finish
- Kitchens and bathrooms should have hard flooring, NOT carpets
- Bathroom suites should always be white
- Colours should be calm, muted and neutral – chosen carefully to accentuate and enhance the best features of each room but not overpower them
- Curtains and blinds should be fitted wide and on the outside of window openings where possible to allow maximum light into the room
The tips above will give you a fabulous neutral base, but for really great-looking rooms that will capture the attention of most buyers regardless of their own personal taste, you’ll need to add life and interest with your furnishings, art and accessories.
These items will be removed from the house before the buyer moves in, so you can be a little more adventurous with colour, pattern and style here. But don’t get carried away – think ‘whisper’ instead of ‘shout’. Go too far and you’ll risk the love/hate divide once more, undoing all your good work with the fixed surfaces.
Anna’s top five tips for adding life to a neutral scheme
- Choose one vibrant accent colour for accessories in each major room – a colour that is brighter or deeper than the main neutral colours of the room and which complements your furniture, curtains and larger items. Picking one colour from a patterned curtain or sofa fabric is a good idea, or if you’re not sure, consult a colour wheel.
- Always have something living in each major room. A thriving pot plant or a vase of flowers will give the room a more three-dimensional feel in photographs. Green leaves will complement almost any neutral colour scheme; that’s convenient, isn’t it?!
- Play with textures to add depth and interest. If you’ve got lots of flat finishes (for example smooth walls, laminate floor, leather sofas) add a chunky-woven throw or a deep-pile rug to give the eye something to focus on.
- Use pattern in small doses to grab attention. Cushions are a fantastic and cheap way to add colour and pattern to a neutral scheme and because they’re so obviously removable, you can get away with more colour or bolder style choices here.
- Avoid ‘dead space’ – areas that look unattractive or with nothing in them, particularly in photographs. Hang pictures on bare walls or place large plants or other accessories to hide sockets, pipes or fill empty corners.
Anna Hart is an expert in staging homes for sale, working with house sellers to maximise their chances of selling as quickly and as profitably as possible. Anna’s new e-book “How To Sell Your House For Top Price, Fast” brings her practical and proven house sale preparation strategy to sellers across Britain.
Special book offer available for Zoopla blog readers – click here
The cost of a fixed rate mortgage is rising at its fastest rate for two years, figures showed today.
The average interest rate charged on a two-year fixed rate deal increased by 0.09 per cent in April, the biggest monthly jump since February 2012, according to financial information group Moneyfacts.
The group said those who wanted the security of knowing what their monthly mortgage repayments would be should consider remortgaging now before rates rise further.
It blamed the recent increase on volatile swap rates, upon which fixed rate deals are based.
It said swap rates were rising and falling on a weekly basis in response to ongoing speculation about when the Bank of England would begin to increase interest rates.
There is currently a tight correlation between the rates charged on two-year fixed rate mortgages and the rates banks and building societies pay to borrow funds through two-year swap rates.
This similarity in the rates has left lenders with little room to absorb any increases in swap rates, meaning they are instead passing it on to borrowers.
The average cost of a two-year fixed rate mortgage increased on 14 of the 20 working days in April, while it fell on just three days.
Five-year fixed rate loans also saw increases, with their average cost rising on 15 out of the 20 working days.
The increase lifted the average cost of a two-year fixed rate deal across all loan-to-value (LTV) ratios to 3.61 per cent at the end of April, up from 3.52 per cent at the beginning of the month.
The rise would add £290.88 to the total cost of an average fixed rate deal on a mortgage of £250,000 over its two-year term.
Sylvia Waycot, editor of Moneyfacts.co.uk, said:“It is a very different mortgage market to four months ago when the Government withdrew its controversial Funding for Lending Scheme, thereby cutting access to cheap money.
“Banks are facing scrutiny over balance sheets via stress tests and capital holding requirements, plus there are increased costs of regulation and processes such as the Mortgage Market Review.
“Don’t make the mistake of thinking that we need a change to the Bank Rate to increase the cost of mortgages, as prices are creeping upwards now. If fixed rates are your preference, now is the time to fix.”
For those who do want to remortgage there are still competitive fixed rate deals available.
Norwich & Peterborough Building Society currently has the lowest rate on offer for a two-year fixed rate mortgage at 2.04 per cent with a £345 reservation fee for people borrowing up to 65 per cent of their property’s value, rising to 2.19 per cent for those borrowing 75 per cent with a fee of £195.
For people with only a 10 per cent deposit, West Bromwich Building Society has the best rate at 3.74 per cent and fees of £499.
Yorkshire Building Society leads the way for five-year fixed rate mortgages with rates of 2.99 per cent and 3.09 per cent for LTVs of 65 per cent and 75 per cent respectively, and fees totalling £975.
If you’re looking for a new build, a development of properties – from two bedroom coach houses to four bedroom detached houses – in Reading is underway.
Where exactly is it? Just over four miles west of Reading.
Monster housing estate or tiny boutique development? It’s pretty big. There are plans for a total of 541 homes on a 50 acre site. Work only started on the development last September and Loddon Park is due to be completed in 2018.
How much will it cost me? Prices start at £250,000 for a two bedroom coach house, ranging up to £560,000 for a four bedroom detached house. There are only a handful of homes available in the current phase, but more are expected to go on sale this summer.
What is so great about it? Developer Taylor Wimpey points out that Loddon Park is the only new development for sale in the area, giving it rarity value, and the entry price is highly affordable. The development will include a public park as well as being handy for picturesque walks along the banks of the Old River and River Loddon.
Surely its not completely perfect? With another four years of building work to go residents will have to accept a certain amount of disruption. There’s also not much going on right on the doorstep – Loddon Park will have a shop but the town centre is around a mile away for anything else.
Who will my neighbours be? Young families, and couples considering starting one soon.
What is Woodley itself like? Not the most thrilling town on earth and short on character, but there are decent shops and enough pubs and restaurants to keep you going and it feels safe and family friendly. Henley-on-Thames is eight miles away, when you need a browse around boutiques in a pretty town, and Reading itself is on the up with plans for a £500m town centre redevelopment due to start this year.
Is it any good for kids? Teenagers will like the huge selection of shops in Reading and the Reading Festival, although they may complain that Woodley is boring despite its theatre and two leisure centres. Woodford Park has facilities for football and cricket, and kids can learn to sail at Black Swan Lake. School standards are broadly high, led by South Lake Primary School, rated ‘outstanding’ by Ofsted and Waingels College or The Bulmershe School for seniors, both of which are rated ‘good’ by the Government’s schools’ watchdog.
How are the public transport links? The nearest station to Loddon Park is Winnersh Triangle, two miles away, with links to Reading taking just eight minutes. From there a journey to London Paddington takes around half an hour. And earlier this year the Government confirmed that Reading will be included on the Crossrail line with direct links to the West End and City of London, as well as Heathrow Airport.
Is it up and coming? Prices in Woodley are performing strongly, up 5.69 per cent in the last 12 months, to an average £305,417. And the coming of Crossrail should stimulate price growth in Reading and its hinterland, so Woodley looks like it has great growth potential.
I like the sound of Woodley, what else is on sale there?
1. Most homes are modern, like this four bedroom detached house on the market for £550,000
2. If you are after value for money, this four bedroom terrace is priced at only just above the Stamp Duty threshold
3. Two bedroom flats like this one sell at just over £200,000