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Mortgage approvals up 40% on long-term average

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Pandemic property boom drives mortgage approvals up 38% on long-term average, Bank of England data shows

  • Mortgages for new home purchases 38% above 10-year average in February  
  • Approvals dipped slightly compared with January but could surge again following the extension of the stamp duty tax holiday and first-time buyer boosts
  • People borrowed £6.2bn against their homes, the highest level in five years  

The pandemic property boom has driven mortgage approvals up nearly 40 per cent on the 10-year average, according to official data.

A total of 87,700 mortgages for new house purchases were approved in February, compared to an average of 63,500 over the past 10 years, according to Bank of England figures. 

This represented a fall compared to the peak of 103,700 approvals in November 2020, and also a 10 per cent fall compared to the 97,400 approved in January 2021.

However, the snapshot was taken at a time when home buyers believed they were unlikely to benefit from the Government’s stamp duty holiday, which could save them up to £15,000 on their property purchase.  

Home loan: The number of mortgages approved for new homes was nearly 40% more than the ten-year average in February 2021, according to data from the Bank of England

Home loan: The number of mortgages approved for new homes was nearly 40% more than the ten-year average in February 2021, according to data from the Bank of England

The tax holiday, which eliminates stamp duty on the portion of a house purchase under £500,000, was initially set to end on 31 March.   

It will continue in its current form until the end of June, and then with a lower nil rate band of £250,000 until the end of September which is likely to mean mortgage approvals tick higher again in the coming months. 

February is also often a notoriously slow month for approvals, with interest usually picking up in Easter – while it is also the shortest month of the year.  

Jeremy Leaf, north London estate agent, said: ‘The dip in approvals occurred as many thought that benefiting from the stamp duty concession would be impossible in view of the backlog.

‘However, since the deadline was extended and vaccination rollout has taken off, the market has gained new impetus and more balance as sellers in particular are not as fearful of welcoming visitors to their homes.’

On the rise: Mortgage approvals dipped dramatically during the first national lockdown in summer 2020, but have now reached highs not seen for more than a decade

On the rise: Mortgage approvals dipped dramatically during the first national lockdown in summer 2020, but have now reached highs not seen for more than a decade 

People borrowed a net total of £6.2billion secured against their homes in February 2021, the highest since March 2016.

The average rate of a new mortgage has also edged up slightly to 1.91 per cent. Rates have been gradually increasing since they hit a low of 1.72 per cent in August 2020.   

Property agents are predicting a busy start to the traditional spring home buying season.  

Anthony Codling, founder and chief executive of property data website Twindig, said: ‘The increasing trend in mortgage rates is likely to encourage more homebuyers to take advantage of the stamp duty holiday. 

‘Property portals and estate agents are likely to be very busy this Easter weekend.’ 

Looking further ahead, first-time buyers will also be spurred on by the Government’s announcement of a mortgage guarantee scheme which will allow them to borrow 95 per cent of a property’s value. 

Several major lenders will begin to offer this in April, but others have jumped the gun and launched their own five per cent deposit mortgages independent of the Government scheme. 

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Mortgage rates remain low and with the government introducing a guarantee scheme on high loan-to-values, there will be more choice for first-time buyers, the lifeblood of the market. 

‘With several lenders including Skipton, Yorkshire Building Society and TSB already launching 95 per cent deals, and others expected to follow suit in coming weeks, rates could also potentially fall, which is further good news for borrowers.’ 

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Japanese knotweed saves £11.8billion off property values  

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Japanese knotweed is responsible for shaving £11.8billion off the value of Britain’s property market, new research by a removal specialist claims.

As many as 4 per cent of British homes are affected by the invasive plant – either on the property itself or on a neighbouring property.

The invasive plant makes homes significantly more difficult to sell as buyers can struggle to secure a mortgage on a property where it is found.

However, Britain’s biggest mortgage lenders told us that is possible to get a mortgage for a home affected by knotweed, but conditions may be imposed.

Japanese knotweed is an invasive plant that makes a property significantly more difficult to sell as buyers

Japanese knotweed is an invasive plant that makes a property significantly more difficult to sell as buyers

Japanese knotweed on a property reduces its value by an average of 5 per cent, according to the figures from removal specialist Environet.

It used that to estimate that with 890,000 households across the county are being hit by a typical reduction of value of £13,200 due to knotweed, this equated to £11.8billion in total.

The plant can be stopped from spreading – although this process can be costly, at around £2,500 for a 10sq m area for a herbicide treatment or £5,000 for a 10 sq m for an excavation.

Environet claims that removing the root system from the ground is the only way to deal with Japanese knotweed decisively with minimal change of regrowth.

It said that despite the lower costs, herbicide treatment is increasingly recognised as a control method only. 

This is because above-ground growth can disappear, but the root system beneath the ground is often induced into dormancy meaning it’s capable of regrowing in the future – particularly if the ground is disturbed by landscaping or building work. 

Environet says removing the root system from the ground is the only way to deal with Japanese knotweed decisively with minimal change of regrowth

Environet says removing the root system from the ground is the only way to deal with Japanese knotweed decisively with minimal change of regrowth

Nic Seal, of Environet, said: ‘Those buying and selling property are legally required to declare if the property is or has been affected by Japanese knotweed, but if an infestation has been professionally excavated with an insurance-backed guarantee to satisfy mortgage lenders, it is possible to restore the property value to close to the original value.’

He added: ‘Herbicide treatment of knotweed has always been very popular due to the lower costs, but the message is getting through that it’s only a control method and won’t solve the problem definitively.

‘Buyers are much more wary of buying a property which still has knotweed rhizome beneath the ground as there’s no way of knowing whether it’s completely dead. There’s also an environmental cost to using chemicals, which is of growing concern.’

Environet explained that the excavation element can be carried out during the winter months, allowing for full use of gardens during the summer.

What mortgage lenders say about knotweed 

Mortgage broker SPF Private Clients, explained that those buying a property where Japanese knotweed is found may find it less of a deal breaker than in the past where the lender may have automatically declined a mortgage application.

SPF Private Clients’ Mark Harris, said: ‘Should Japanese knotweed be identified, there are four categorisations assessing its severity, with 1 being best-case scenario and 4 being worst-case. 

‘Depending on which silo the property falls into, and whether there is specialist eradication work either ongoing or planned, and insurance in place, lenders may be willing to consider the application.

‘Depending on the severity of the problem, lenders may tailor the amount they are prepared to lend, or not lend at all.’ 

While securing a mortgage on a property with knotweed can remain challenging, lenders confirmed that they are open to providing finance if a management plan is in place. 

A Nationwide Building Society spokesman said: ‘Our policy on Japanese Knotweed depends on how far the plant is from the property. If it is less than seven metres away from the property, we would request a specialist report about eradicating it before deciding whether we could lend. 

‘If the plant is more than seven metres away, we would need written confirmation from the borrower that they want to proceed with their mortgage application despite the presence of the plant. 

‘What may be required is assessed on a case by case basis. Where the valuer identifies the presence of Japanese Knotweed, they may advise that a specialist report is required with respect to eradicating the plant and, where applicable, to report on repairing the property. Any report for eradication of the plant should include an insurance-backed 5 year warranty against re-infestation.’ 

And spokesperson for Halifax explained: ‘The presence of Japanese Knotweed itself is not a barrier to lending. 

‘We will be guided by the surveyor’s, and any subsequent expert’s, report on the scale, location and effects of any presence on or around the property.’  

How were the figures calculated? 

Official figures from the ONS show there at 27.8million households in Britain.

Environet disregarded 20 per cent of households that are flats as these are less likely to be affected by knotweed. 

That produces a figure of 22,420,000 homes in Britain. 

Environet’s survey conducted with YouGov in 2021 revealed that around 4 per cent of homes are affected by knotweed, either directly – meaning that it grows on the property – or indirectly where a neighbouring property is affected. 

It means 889,600 homes are affected in total, according to Environet.

The average value of a property in Britain is £264,244, according to Land Registry’s figures for August. 

Environet claimed that Japanese knotweed reduces the value of a property by 5 per cent on average. This is based on its own anecdotal evidence of what a property is worth once a knotweed management plan is in place (ie the 5 per cent reflects the amount that a buyer might try to reduce an asking price by due to the stigma and risk of the knotweed returning after treatment or removal). 

The 5 per cent reduction translates into £13,212 being knocked off the average home.

As such, the total amount knocked off property values in Britain as a result of Japanese knotweed is therefore 889,600 households multiplied by £13,212, which is £11,753,395,200.

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Ikea offers personalised design service in Ireland

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Ikea is piloting a home design service in Ireland. The Swedish furniture giant opened the new service in Naas on Monday.

Customers will be able to consult the retailer’s in-house home interiors specialists at the new store. The company said the service would be free, personalised and one-to-one.

It said people would be able to talk through ideas for upgrading their kitchen, living room or wardrobes with a designer. They will also be able to order any Ikea products from the store for delivery. Unlike Ikea’s other smaller store in Carrickmines, south Dublin, there will be no items available on site to bring home on the day.

The company said Ireland was one of eight markets worldwide in which it is piloting the new service.

“This new service allows us to bring our home furnishing expertise to the many, with bespoke design solutions that best reflect our customer’s unique style and design challenges,” said Martyn Allan, Ikea’s market manager in Ireland. “At the same time, we get the opportunity to listen to and learn from our customers to continue to develop our store formats.

“We are so proud that Ireland is part of this pilot, offering us the opportunity to move closer to our customers in towns and cities currently without IKEA stores,” he added.

People looking for a design consultation will need to book in advance online. When the company confirms the booking, it will let the customer know what to bring with them, such as measurements or photographs.

Over one or two consultations – which will not cost anything – the designer will draw up a 3D plan which will be accessible on the Ikea website to the customer up to five days after the consultation.

The store on Naas Main Street will feature some room sets and the company says the consultations will operate in strict compliance with current public health guidelines.

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Dubs get exercised over digital dollars

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Dubliners are to be “paid” for a walk in the park with “civic dollars” they can cash in for coffee and cake and other goods and services, in an effort to encourage outdoor exercise.

Visitors to five parks in the Dublin 8 area can earn the community currency if they sign up for a new smart phone app to allow Dublin City Council to track their park use.

The scheme is being piloted in the area from the Liberties to Inchicore, following research by the council’s Smart D8 team which found just 40 per cent of local residents took regular exercise, but 92 per cent said they would use a park for exercise if it was available to them.

Visitors to St Audoen’s Park, St Patrick’s Park, Weaver Park and Oscar Square in the Liberties, and Grattan Park in Inchicore who use the app will be rewarded with civic dollars for every 30 minutes they spend in the park up to a limit of 5 dollars a day.

Data anonymised

The system uses GPS data and allows users to opt in once they enter a park. Their data is anonymised, and a user’s session will end automatically once they walk out of the park. Data gathered will be used by the council to analyse park usage and allow for future planning and infrastructure improvements.

The dollars can be cashed in for discounts in a number of local businesses including Little Bird cafe, the Bike Hub, Mobility Genie, the Digital Hub and Epic Ireland. The dollars can also be donated to community organisations for more expensive services including marketing or IT advice and legal consultations, with participating companies including Core Tech IT, Paul Saxon Consulting, Éire Graphic Design and VAVA Influencers.

The Smart D8 project was established earlier this year to investigate innovative approaches to improve citizens’ health and wellbeing in Dublin 8, with the involvement of St James’s Hospital and the Digital Hub.

The civic dollars pilot will run for five months, with the aim of attracting 1,000 users in the first two months, and could be rolled out to other parks in the city if successful.

Organisations accepting dollar donations include Warrenmount Community Education Centre, Robert Emmet Community Development Project, Solas Project and Fatima Groups United.

The scheme had the potential to “improve the health and wellbeing of our citizens”, Lord Mayor of Dublin Alison Gilliland said.

“We need to encourage increased use of our parks, and the civic dollars project will do that while having the added benefit of contributing to local businesses and community organisations.”


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