HomeProperty InsuranceBenefit of mortgage overpayments, house prices, record prices faced by first-time buyers,...

Benefit of mortgage overpayments, house prices, record prices faced by first-time buyers, planning permission for holiday lets and other UK property news

In recent UK property news headlines, the housing market continues to feature relatively high mortgage interest rates. Although house prices have largely stabilised, they continue to creep up steadily – if modestly.

As ever, first-time buyers are among those most likely to be affected by rising house prices – which have recently gained record heights.

Local communities in tourist hotspots continue to suffer the influx of second-home owners and rising house prices – the government considers managing the problem through planning legislation.

Mortgage overpayments take the sting out of rising interest rates

If there’s one way of paying less for your mortgage, of course, it’s having a smaller mortgage to start with. As interest rates continue to rise, there is an even bigger incentive to reduce the size of any outstanding mortgage balance.

A story in the Mail Online on the 20th of April revealed that a record number of homeowners overpaid their mortgage repayments last year in a bid to reduce the outstanding balance and, in that way, take the sting out of the mortgage interest rates that have risen so steadily this year.

Quoting figures from the Equity Release Council, the newspaper said that a total of £23.3 billion was made in mortgage overpayments during the whole of 2022 – with an unprecedented £6.7 billion overpaid in the first quarter of this year. That latter figure represents a new high of more than £6 billion overpaid since records began 24 years ago.

Holiday lets in English tourist hotspots to require planning permission?

Owners of holiday let property could soon have to secure planning permission before they can let the homes under short-term tenancies.

The government is currently consulting stakeholders about bringing in the new rules to help protect homes for local communities in tourist hotspots. The scramble for holiday lets is raising prices and leaving many local people unable to afford to live in the area, explained a report by online listings website Zoopla on the 18th of April.

Leading the current consultation exercise, the Secretary of State for Levelling Up Housing and Communities, Michael Gove, referred to the importance of balancing the sometimes competing demands of a thriving tourism industry with the need for local people to have access to affordable housing. He wants to ensure that local communities that are not swamped by large numbers of short-term lets and holiday accommodation.

House Prices – Latest News

After a period in which it was practically “frenzied”, the housing market has now stabilised somewhat, concluded Forbes magazine in a story on the 24th of April.

In contrast to the wilder price increases this time last year, the average price of a home in the UK crept up by only 0.2% in April. That modest £890 increase takes the average to £366,247.

The 0.2% increase is smaller than the 0.8% increase registered in March and remains significantly below the gains usually shown at this time of the year of around 1.2%. Instead, 1.2% represents the current modest annual rate of increase in house prices.

Small increases in average house prices were recorded across the UK’s various regions except for London and the Northeast – where a decline in prices of 0.5% and 0.1% were recorded. Scotland achieved the biggest monthly increase in average house prices – some 3.2%.

As the market grows more sluggish, sellers are having to rein in their expectations about the value of their homes in recognition of a changed economic climate.

Going against the tide of generally slower growth, the price of homes for first-time buyers has reached new highs.

First-time buyers face record house prices as sales recover

That boom in the market for first-time buyers was picked up by Yahoo Finance in an article on the 23rd of April.

As we’ve already noted, the price of an average home in the UK was £366,247 this April – reflecting activity in the housing market that has reached the levels previously enjoyed before the pandemic. Prices are growing at a modest annual rate of 1.2%.

The market for first-time buyers’ homes, on the other hand, has seen an 11% increase in demand compared with that before the pandemic. As the rental market has become ever more competitive, younger renters are looking to buy their first home.

Holding them back is the need to save for a deposit and to secure a mortgage at a time when interest rates have rocketed recently.

The average price of a home typically bought by first-time buyers reached an all-time high of £224,963 during April.