“The largest mortgage regulation change in history”
That quote summarizes recent attention grabbing headlines across the property news spectrum. This is of course the now not news that both lenders and their customers are facing much tighter restrictions when applying for a mortgage. This is in a bid to curb the pre-recession extravagances in the mortgage lending market.
The new mortgage lending rules have changed the way in which lenders will be making affordability assessments delving deeper into the lifestyles of their clients in order to make more rigorous assessments under the new guidelines. This includes a stress test based on the future affordability of the mortgage and further probing questions on your weekly shopping questions that could mean that many more first time buyers seeking a mortgage could be turned away.
This has led to the CML to update its mortgage marketing review, with its guide Working Together. Paul Smee, director general at the CML, had this to say:
“This collaborative approach in working jointly with the IMLA and AMI demonstrates the effectiveness of joint engagement in driving good practice within the industry to deliver good outcomes for customers.”
So whilst this does mean there is a tightening of industry standards on the whole, there is as always a silver lining, which could see benefits to London rental properties and London Letting Agents.
So with all this pulling up of socks in the industry, are we seeing a tenancy future? Its almost certain that this is not a future most people will be looking forward to, as over a third of rental properties are declared non decent. Some landlords enjoy an unsavory amount of control over their tenants, with claimed property damage going beyond what you can or can’t put up on a magnolia walls.
So what is the attraction of buying? It may simply be that old saying ” An Englishman’s home is his Castle” or perhaps (more likely) it may be how often we see a property bubble in the UK. As our previous article pointed out there has been a significant bubble across the UK but none more so than in London, with a massive 18% increase in recent months.
Compare this then (as we often do) with our German counterparts. The German property bubble reported in an FT article in February pointed out that there hadn’t been a property price bubble since 2003. That is since the time the Bundesbank had been recording such fluctuations. Compare that with the UK where in the past, the common advice on property development programs was generally not to rent but to wait for price fluctuations in the UK property market and then sell. Fast forward to these pre recession times and even today we are still a nation determined to buy. Now might be the time to start considering the benefits of a rental future.
In Germany where lending restrictions have been tough since the year dot there is much greater variety in rental properties, as Savills researcher Lucian Cook put it [in a recent telegraph article]
“Government policy needs to become less fixated on home ownership and urgently address the need to substantially increase rental supply and encourage long term landlords. That would create more competition among landlords and consequently improve the standards and choice of rental accommodation and reduce the pressure on rents,”
Or in lay persons terms, the more milk supply you have and the greater the demand for milk on the shelves – then the cheaper the milk, and the more choice you have. Knowledge worth more than a bowl of cornflakes.
So perhaps “an Englishman’s home is his castle” is a dead phrase, the latest lending restrictions could work in favor of the UK rental market and perhaps even make more sense. Perhaps the phrase we are searching for is something more German like; “Alles ist seinen Preis wert” or the English equivalent, which is; “Everything is worth its price”
You are of course welcome to browse our Mews property rentals.