Earlier in Britain people wanted to “Climb the property ladder”. But now, due to economic and political instability and rising costs, many people are now choosing to improve and repair their existing homes.
Stalled Movement
- Despite historically low interest rates and stable property prices, mortgage applications continue to decline.
- Compared to the previous year, mortgage applications from buyers fell by 1.5% in June 2019, the first time this has happened, according to data from [Finance UK].
- Compared to June 2018, mortgages for moving homes fell by nearly 24%, while mortgages for buying homes fell by 3.6%, according to data from [Habito].
Financial and Emotional Factors:
According to experts several factors are responsible for this retardation:
- Rising house prices: Even as flat prices rise, they fail to attract buyers.
- High costs: Stamp duty and other costs on purchase prices, such as agent fees and conveyancing, add up to £11,000 on average, putting a financial burden on buyers.
- Uncertainty: Due to political and economic instability, people are not at all eager to take loans for new homes and migrate.
Renovation Boom
In terms of loans taken for home improvements, mortgage lending is seen to be on the rise. This loan is increasing at more than 8% year on year.
A study by TSB revealed that two in five homeowners now prefer to renovate their home rather than move. This has increased due to relaxed planning restrictions.
Impact of Relaxed Planning Laws
In May 2019, home improvement became easier for many people as there was no need to seek permission for home extensions. As a result of this change, one in five homeowners are planning to extend their home in the next three years, according to a TSB survey.
Benefits of Extensions
Nick Smith, head of mortgages at TSB, says extensions are a great and cost-effective way to extend a home. It is very cheap compared to other options like stamp duty and legal fees.
James Ginley, from Legal and General Surveying Services, says that well-designed extensions, such as open-plan living areas, can significantly increase the value of your home.
Challenges and Solutions
The average Brit spends £3,000 on home improvements every year, but many don’t have the money to start with. 33% of homeowners, especially those under 34, borrow from [TSB] for home improvements. But, the new law is likely to increase disputes, as 80% of homeowners expect such disputes [TSB].
In the UK housing market, the emphasis is on improvement rather than expansion. This trend is increasing due to economic constraints, rising costs and lax planning regulations. While creating more space by building new homes is an attractive option, new economic measures are needed to bridge the gap between the needs of people in Britain and their affordability.