8:57 AM, 13th January 2015, About 7 years ago 2
1. Supply and demand.
The current housing shortage is at the highest level for decades. There is a demand for over 260,000 houses to be built each year. The current level of new builds is at less than half this and the demand is increasing with the increasing population. We live on an island that is not getting any bigger!
2. Economic Factors
There are a number of signs that the UK economy is out performing the big western economies and certainly Europe. This has lead to the UK being considered a safe haven for foreign investment with asset purchase injecting further demand into the property market. The Bank of England have maintained the base rate at an all-time low of 0.5% since March 2009. Wage inflation is low and with oil prices plummeting to below $50 a barrel this week and deflation in Europe there is little inflationary pressure in the short term to suggest the interest rate will rise any time soon.
3. Section 106 obligations
These have been removed for small-scale developers. Developments of 10 units or less (with a maximum combined gross floor space of no more than 1,000 square meters) will be exempt. It is estimated that, on average, it will save £15,000 per new dwelling.
4. Stamp Duty Land Tax
The recent changes in Stamp Duty, has seen a major cost saving for the majority of buyers. With the average house price in the UK now £275,000, the stamp duty would have been £8,250 but is now only £3,750 producing a saving of £4,500 for buyers.
5. New Lenders
The High Street banks, when they are lending, are very restrictive as to where and who they will lend to. Fortunately we now have access to a number of new alternative lenders that have recently entered the commercial finance market with far less restrictive lending criteria. They will lend throughout the UK and at higher loan to cost ratio than the main banks.
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