While many investors these days get caught up in the whirlwind that is the UK property market, there are the would-be sellers sitting mournfully at the side lines.
These are the home owners who are the most desperate to sell. And there are around two million of them. They either can’t get mortgages because of cladding issues, or they are stuck in a freehold nightmare and facing escalating land rents.
These are also the individuals who must find the latest statistics on property price rises, in particular, incredibly galling. Many of the homeowners whose apartment blocks have ‘dangerous’ cladding have been told their homes are now ‘worthless.’
Cost of average UK property up more than £15,000
So, what are the latest rises? Well, take a look at this month’s Halifax building society statistics. They have just declared that the average UK property has increased by £15,409 since the summer (June). Their figures are based on the number of mortgages approved.
Other House Price Indexes, including government property sales figures, tell a similar story of a buoyant property market.
The estate agency body NAEA Propertymarket, for instance, announced via its latest survey that the number of prospective property buyers was the highest ever for the month of October ie since records began back in 2006. An average of 12 sales were agreed per estate agents. Not only that, but the number of first-time buyers also increased – from 19% in September to 21% in October.
Grenfell sales legacy looms large
Campaigners from the End Our Cladding Scandal group say there are a huge 1.93 million homeowners in England unable to get their homes sold and move on. No-one wants to buy their property, mortgage lenders won’t entertain them and, as you might expect, home insurance is through the roof.
For those high-rise apartment dwellers whose homes are surrounded by safe cladding, they have a long wait ahead of them to prove it. An EWS1 form will do this, but the waiting list is huge, and it doesn’t come cheaply either. This EWS1 form is part of new government regulations introduced following the Grenfell Fire Tragedy in 2017.
Freehold scandal of developers is binding
And what of the unfortunate leaseholders who don’t own the land on which their property is built? It’s reckoned there are around 100,000 such homeowners – most of whom bought a New Build from either Barratt Developments, Countryside Properties, Persimmon and Taylor Wimpey. Their ground rents double every 10 years or so. To buy the freehold themselves costs thousands and, understandably, deters potential buyers.
An article in the Telegraph newspaper points out that if these two million “mortgage prisoners” were added to the sales figures, with a selling price of £000, then the average property valuation would be down. Not only that, but instead of a 4.9% increase, it would be a 7.4% fall year-on-year. Not such a ‘buoyant’ property market now. Will it all unravel when the Stamp Duty Holiday comes to an end? There are increasing calls for Rishi Sunak to extend this beyond the March 31 deadline. Watch this space…