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Are First Time Buyers Suffering Because Of COVID-19?

Are First Time Buyers Suffering Because Of COVID-19?

by | Apr 23, 2021 | Latest News, Advice, COVID-19

COVID-19 has changed the economic position of individuals and businesses significantly within the UK. First time buyers have not been spared from the financial impact of COVID-19, and this demographic has always come up against major challenges when attempting to get their first foot on the property ladder.

The most significant challenges for first time buyers are well known and include saving enough money for the deposit and earning a high enough salary to attain the necessary mortgage.

The Coronavirus pandemic and the job and wage insecurity it causes have put lenders in a position where they are increasingly cautious about lending, and in particular with first time buyers. 

According to a recent survey conducted by Trussle:

  • 65% of first time buyers say they feel it is impossible to get on the property ladder, with 62% deciding to delay their home-buying efforts and save for a further year.

 

An Increasingly Confusing Housing Market

The changing lending criteria and deposit requirements are leaving the first time buyer confused, also evidenced in the Trussle survey:

  • 76% of first time buyers in the UK say they feel confused, angered, and worried about how COVID-19 has affected their home ownership prospects.

The number of lending products for first time buyers is down. There are now fewer high Loan To Value (LTV) mortgages, and fewer than 4% of mortgage deals with an LTV of over 90%, compared to this time last year.

It is not all bad news because other financial support for first time buyers remains in place. The Help to Buy, Right to Buy/Acquire, and Shared Ownership Schemes are three examples of the financial support available. Furthermore, Chancellor Rishi Sunak once again extended the Stamp Duty Holiday (originally planned to end on March 31st, 2021). The Stamp Duty Holiday will now come to an end in June 2021, with a tapering off period that will run to the end of September and will save home buyers up to £15,000.

However, first time buyers may still need to look further afield in more affordable areas and consider if working from home is a viable long-term option for them before making a purchasing decision.

 

Post COVID Outlook

While property viewings, valuations, and sales continued through the latest bout of lockdown measures, the housing market’s recovery can only be achieved by including the buying power of the first time home buyer.

Property availability continues to be an issue. COVID-19 is adding three to eight months to new residential development build times, delaying the completion of 250,000 homes. However, residential development finance is helping property developers acquire financing and complete projects, which will ultimately improve availability.

For more information on the help available for first time buyers and residential property developers, please contact the BLG team.

The Increased Demand For Housing In The UK

The Increased Demand For Housing In The UK

by | Apr 21, 2021 | Advice, Latest News

2020 and 2021 have so far been two years like no other, with challenges and changes on a UK and global level. However, the latest government and industry statistics show a housing demand increase in the UK, showing the population’s resilience and change in lifestyle values.

So, what do the statistics for housing market supply and demand show?

  • Housing demand in 2021 is up 6% – According to Estate Agency Get Agent, their latest index shows that demand has risen in the first quarter of 2021 by 5.7%. The highest demand is seen in Bournemouth, Newcastle, Oxford, Bristol, Glasgow, Sheffield, Leeds, and Plymouth, with London showing its first signs of higher housing demand, following the rises seen elsewhere.
  • Housing demand in 2020 was up 40% – According to Zoopla, demand in 2020 was 40% higher than in 2019.
  • November 2020 house sales were up 20% over 2019 – HMRC recorded 115,190 house sales in November 2020, which is up 19.3% from November 2019.

House prices and mortgage approvals are also on the rise:

  • House prices rose 7.5% in 2020 – According to the Office of National Statistics (ONS), house prices have increased by 7.5% over the year up to January 2021, with the highest price growth seen in rural areas.
  • Mortgage approvals are at their highest since 2007 – According to figures from the Bank of England, the highest number of mortgage approvals were recorded in November 2020. Mortgage approvals are at their highest since August 2007.

 

What Has Led To The Increase In Demand

The increase in housing demand is broadly believed to be in response to two significant events that occurred in 2020:

  1. COVID-19 pushes lifestyle priorities towards more space – The Coronavirus pandemic has changed the way that people work, with a large shift to remote working from home, increasing demand for larger properties with a higher number of rooms to accommodate home offices. Furthermore, with restrictions on socialising indoors and in groups, more outside space is a top priority for many home buyers. The combination of these desires for more space is reflected in a change where demand is strongest, with rural properties and houses in higher demand than city apartments and flats.
  2. The Stamp Duty holiday significantly lowers the cost of buying a home – In England, the Stamp Duty holiday was introduced in July 2020 (July 15th in Scotland and July 27th in Wales). This tax break was set to end on March 31st, 2021. However, the Chancellor of the Exchequer has announced that the Stamp Duty holiday will be extended to June 30th, keeping the higher threshold before Stamp Duty is applied.

 

Can Supply Meet Demand?

Housing supply and demand are often in an imbalance, with demand higher than supply. However, access to residential development finance helps developers acquire the financing they need to build or convert one home to hundreds.

BLG continues to support developers with residential development finance, and our team of experts are waiting to help you get your next project underway.

The Impact COVID-19 Has Had On Development Finance

The Impact COVID-19 Has Had On Development Finance

by | Apr 1, 2021 | Latest News, Advice

The UK economy has been hit hard in 2020 and 2021 as it feels the impact of COVID-19. The Coronavirus pandemic and a turbulent marketplace have hit the housing market hard, and the availability of property development finance has contracted in response.

When residential and commercial building valuations are less predictable, and exit strategies are less certain, traditional banks become cautious and wary of lending or demand more equity to mitigate lending risks.

Consumer and business spending is below pre-coronavirus levels and could remain so for years to come if access to property development finance is restricted. However, if development finance is accessible and sensibly qualified, the recovery scenario looks much more positive, with property development loans aiding reform and accelerating post-pandemic recovery.

One stimulus that has been introduced to help tackle this difficult time is the government-backed Coronavirus Business Interruption Loan Scheme (CBILS). CBILS offers finance of up to £5m over two years, for SMEs with an annual turnover of up to £45m.

The business loan is for businesses losing revenue or experiencing cash flow disruption as a result of the pandemic. BLG is a scheme partner, bolstering funding availability alongside our usual property-secured loans for businesses that meet the scheme’s criteria.

Residential Development Finance

With a viable borrowing residential development finance proposal that meets our standard lending criteria, residential property developers can access CBILS development finance through BLG.

Whether you apply for funding through the scheme or not, residential developers should put greater focus on contingency planning.

The additional challenges that have come about because of COVID-19 include higher employee sickness levels and the unavailability of key staff members. There may also be a loosening or tightening of restrictions on the number of staff, partners, and contractors allowed on site, which can delay building projects.

According to the government’s housing accelerator, Homes England, the pandemic has added between three to eight months to build times, delaying the completion of almost a quarter of a million homes.

BLG will work with you to find the best residential development finance solution to help you tackle the challenges that lie ahead.

Commercial Development

The demand for commercial premises is greater as businesses look to secure additional warehouse space to protect their supply chain from disruption risks and in response to the current boom in eCommerce.

Commercial property developers have access to BLG’s standard development finance solutions in addition to CBILS funding. Your business must have a viable borrowing commercial development finance proposal and meet our normal lending criteria to access development finance.

BLG is a specialist lender in short-term loans and is dedicated to supporting your individual needs with flexible loan structures for both new and existing customers.

Contact the BLG development finance team today to access funding for your next development project

The Help Available For Businesses During COVID-19

The Help Available For Businesses During COVID-19

by | Feb 5, 2021 | Advice

Many businesses in the UK are experiencing financial hardship and uncertainty in the face of the COVID-19 epidemic. Through national lockdowns, company operating restrictions, and changes in demand, this is undeniably one of the most challenging times that business owners have endured for many years, if not decades.

In light of the exceptional circumstances, the government has introduced a scheme to encourage lenders to lend, backed by a government-guarantee. A coronavirus business loan is now available through BLG, further bolstering the business support you need.

The scheme is open to smaller British businesses (SMEs) that have an annual turnover of up to £45m. The coronavirus business loan is available for firms that are losing revenue and experiencing a disruption to their cash flow as a result of the epidemic. Your business can self-certify that it is being affected by the COVID-19 epidemic.

Your business must not have been certified as a ‘business in difficulty’ on or before 31st December 2019 to be eligible for a coronavirus business loan under this particular scheme.

Here we take a look at what the government scheme offers SMEs and property developers.

 

Coronavirus Business Interruption Loan Scheme

Up to £5m is funded by the Coronavirus Business Interruption Loan Scheme (CBILS) over a term of up to two years. The scheme covers lending fees and the first year’s interest, so your business will pay no fees or interest during the first twelve months of the coronavirus business loan.

It is important for businesses to understand that they are fully liable for the debt. Personal Guarantees are still required, but these have a 20% cap on the outstanding balance of the CBILS facility once proceeds from the sale are applied. Furthermore, a Principal Private Residence (PPR) cannot be used as a security to support the personal guarantee.

You must have a viable borrowing property development finance proposal for BLG to consider your application for a coronavirus business loan, and you will need to meet other standard lending criteria.

The CBILS programme has been extended by the government a number of times. The current key deadline dates are:

  • Loan application to be received by the lender – By end March 2021
  • Loan offer accepted by the borrower  – By end May 2021
  • First draw for development loan – By end August 2021

 

How BLG Can Help

BLG is a development finance specialist serving SME property developers. Accredited by the British Business Bank, BLG is an approved lender under the Coronavirus Business Interruption Loan Scheme.

You can register your interest for a coronavirus business loan and development finance, which BLG provides through CBILS, with flexible loan structures that support your individual needs and requirements. We are accepting applications from both new and existing customers.

BLG is proud to support UK businesses during the economic uncertainty that the coronavirus has caused. We can help your business navigate through the challenges ahead with a property-secured loan that is part of a government-backed scheme.

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