Category: All News

A new briefing note has just been published by the Council of Mortgage Lenders (CML) for local authorities and housing associations to highlight the problems they can cause for lenders by imposing planning restrictions under section
106 of the Town and Country Planning Act 1990.

While the ongoing funding crisis continues to restrict mortgage lending, it is more important than ever that so-called section 106 agreements are applied as consistently and simply as possible by councils when agreeing planning permission.

The briefing note sets out the concerns of lenders and urges more consistent use of the model section 106 agreement developed with the government’s approval in 2006. This model agreement seeks to ensure that any restrictions in planning permission for low-cost home-ownership schemes do not restrict the ability to lend on properties.

Better awareness of the model agreement by planning and housing authorities, along with discussion with lenders while negotiating and agreeing a section
106 agreement, are important to help avoid creating barriers to lending.

The CML have been working recently to raise awareness of the types of restrictions currently found in section 106 agreements that constrain mortgage lending. They are seeking the help of a range of organisations to ensure their briefing note is distributed and properly understood.  The Homes & Communities Agency, Royal Town Planners Institute, Chartered Institute of Housing and National Housing Federation are all well placed to help bring lenders’ concerns to the attention of local authorities and housing associations.

The briefing note is just one part of the work the CML have been pursuing to highlight and lobby for improvements that will make low-cost home-ownership schemes more successful.

The vast majority of Britain’s new home buyers would recommend their home builder to a friend, according to the Home Builders Federation’s (HBF’s) fourth annual Customer Satisfaction Survey.

The survey also showed that over three quarters
(76 per cent) of purchasers questioned in the 12 months from October 2007 to September 2008 were satisfied with the overall quality of their home.

Stewart Baseley, Executive Chairman of HBF says:

“Ensuring that customers are happy with their new homes is of crucial importance to homebuilders, especially in the current market.

”Whilst being ever conscious that more needs to be done, we are pleased that our survey results show consistently high levels of achievement across all areas. When the results are looked at alongside other such surveys, they demonstrate that builders are building what customers want and doing it in a way that ensures satisfaction in the product. ”

Question responses included the following results (2008 results in brackets):

77 per cent (76) said they were satisfied with
the quality of their new home

76 per cent (75) would recommend their
builder to a friend

76 per cent (77) were very or fairly satisfied
with the service during the buying process

70 per cent (72) regarded their builder as very
or fairly good in relation to completing their
home on time

73 per cent (72) of buyers were satisfied with the condition of their home on move-in day

65 per cent (64) were very or fairly satisfied with the homebuilders’ service after purchasers moved in

With house prices now significantly lower than
12 months ago, now could be an ideal time to purchase a new build home. As well as being built to higher environmental standards than existing homes, and so saving over £500 a year of fuel bills, new build customers get a range of options in terms of their typ

The Nationwide Building Society has introduced a mortgage allowing borrowers to take loans worth 125 per cent of the value of the home they are buying. The lender said the loans offered a “socially responsible and prudent” solution to people in negative equity.

The “very niche” product is only available to existing Nationwide customers who need to move, but owe more on a mortgage than their property is worth.

Nationwide borrowers will be able to borrow up to 95 per cent of the value of their new home, with a five per cent deposit.

They will then be able to transfer the negative equity on their former home to the new property, as long as it does not exceed 30 per cent of the new home’s value.

Borrowers will be offered a
three-year fixed rate mortgage at
6.73 per cent or a five-year fixed rate mortgage at 7.48 per cent on the
95 per cent portion of the loan. Interest charged on the negative equity part of the loan rises to 7.23 per cent and 7.98 per cent respectively.
Mortgages that offered 125 per cent of the value of a property came in for significant criticism after the credit crunch and were blamed for the collapse of Northern Rock in September 2007. It had been thought that such mortgage products had been consigned to history but the return of the 125 per cent mortgage has arrived sooner than anticipated.

The number of mortgage products available has fallen to their lowest levels in years with a contraction in mortgage products of 90 per cent since 2007.

There were 27,962 mortgage products available to borrowers in July 2007 compared with just 2,282 mortgage products available now.

Until this changes, and more mortgages become available, house price growth is likely to remain muted at best with further falls possible, and many borrowers may struggle to get a mortgage.