Housing is, like never before, a major election issue.
Housing is, like never before, a major election issue.
The political parties have rushed out a series of promises reflecting public concern at a dysfunctional housing market, but the industry has unanimously dismissed them as failing to recognise the key issue - the supply of new homes.
Philip Hogg, chief executive of Homes for Scotland, said: "Whether you are talking about housing for social/private rent or sale, the fundamental fact is that we need a lot more housing of all types to meet the country's diverse needs.
"This is the only way to tackle the housing crisis which is impacting far too many of our young people and growing families.
"In Scotland, the scale of the problem is all too clear: it has been nearly two years since Audit Scotland highlighted the need for half a million new homes over the next 25 years yet less than 15,000 were built last year, representing a drop of 40% in total housing production since 2007."
Scottish property prices rose in February at their fastest rate since the heady boom days of June 2007 - up by £2,900 to an all-time peak of £169,742, a 1.7% rise on the month and 6% on the year. Transactions however were on the rise only at the high end, as buyers swooped to avoid the big rise in stamp duty for properties above £325,000 North of the Border last month
Christine Campbell, regional managing director of Your Move, which compiled the figures, said: "But with measures like the new Help to Buy ISA, lower transaction tax for the majority under the LBTT, and rock bottom interest rates on mortgages, buyers' prospects are already greatly boosted, and political certainty will raise consumer confidence even further."
The new Land and Buildings Transaction Tax in Scotland has raised the stamp duty threshold to £145,000 and set a 2% rate up to £250,000, while maintaining a 5% charge between £250,000 and £325,000, at which point it doubles to 10%.
Chancellor George Osborne's Help to Buy ISA allows young savers to build up £12,000, with interest of £252, over five years, triggering a £3000 top-up from the government. That amounts to a deposit of around 11 per cent of the average first-time buyer property outside London.
Mortgage rates are at all-time lows. On Thursday Cooperative Bank launched the UK's lowest ever two-year fixed rate mortgage, according to Moneyfacts, fixed at 1.09% - but only for loans up to 60% of value and with a whopping arrangement fee of £1499.
Tesco Bank has recently cut its comparable deal to 1.29per cent plus a £995 fee, and it also has a two-year tracker on 90% loan to value at 2.6% plus £495 fee.
Mortgages are taking longer to process, however. New stricter lending rules which came into force a year ago has led to the average mortgage offer taking 50 days to approve, according to the National Association of Estate Agents. It says: "This increases the risk that sales won't go through and puts unnecessary pressure on any chain transactions."
More significantly, Glasgow Credit Union says there are three million 20-34 year olds in the UK who are still living at home with their parents. The union has pledged to make £10m available to help first-time buyers onto the property ladder this year, it has removed all set up, arrangement and product fees, and says its innovative partnerships with house-builders and government shared equity schemes mean that first-time buyers will need as little as a £1,000 deposit. It offers a mortgage decision in five days and a named mortgage advisor.
June Walker, director, said: "The mortgage market is marginalising young people who want to own homes that fit their needs. This age group can more than afford mortgage repayments and in many cases are spending more on rental accommodation than they would on a mortgage repayment, simply because they haven't got a large deposit. Mainstream banks and mortgage lenders are making much of their low rates in the news, yet only older homeowners with lots of equity or those with large deposits quality for these deals."
The Liberal Democrats have unveiled Help to Rent and Rent to Own schemes aimed at getting renters onto the property ladder, though only in England.
Labour meanwhile has promised to scrap stamp duty in England and Wales for properties under £300,000 - a saving of just under £250 on the average first-time property. Scottish properties under £145,000 are already exempt.
Labour's promise to peg rents to inflation has been criticised by the industry for failing to recognise that rents have lagged inflation since 2008, and that regulation risks forcing landlords out of the market and reducing supply.
Moray McDonald of RBS, chairman of the Council of Mortgage Lenders, says: "We need a housing strategy that commands all-party support with a three-line whip from national government down to the parish council to ensure it's implemented. That strategy should come from us, the industry, in partnership with government. Fix this, and the market itself will address affordability."
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