Mortgage Lending Continues to Grow

The number of mortgages taken out to fund house purchases increased in June, according to figures from lenders which suggest that new rules on loans have not dampened the property market.

Data from the Council of Mortgage Lenders showed that 60,500 house purchase loans worth a total of £10bn were taken out during the month, a rise of 5% by number and 6% by value on May's figures. Compared to June 2013, the figures were up by 15% and 23% respectively.

More than half of those loans were taken out by home movers, who accounted for 31,900 of the mortgages advanced, 4% up on May, however the number of first-time buyers showed a bigger month-on-month increase, rising by 7% to 28,600.

Despite the introduction of new affordability tests in April, which force lenders to check applicants' outgoings as well as their income and to stress-test their borrowing to ensure they can still afford repayments if interest rates rise, the amounts borrowed by first-time buyers increased in June.

Investors' appetite for property continued to grow, with the CML reporting a 23% year-on-year increase in the number of buy-to-let loans. A total of 15,600 landlord mortgages were advanced, worth £2.2bn.

The latest report from the Royal Institution of Chartered Surveyors due on Thursday is expected to suggest house prices could fall in the coming months after the number of sellers increased to exceed the number of would-be buyer, the Times reported on Monday.

Changes to Building Regulations

Originally planned for October 2013, changes to Part L will now come into force on 6th April 2014 according to the government’s latest announcement.

The main markets affected by changes to Part L of the building regulations are those for the development of new homes and non-domestic property and the replacement of specified building services to existing non domestic property.

Higher standards will effectively mean clients, designers and contractors will have to comply with more rigorous energy efficiency and building emission targets. New build homes will have to be 6% more energy efficient, whilst non-domestic buildings will have to be 9% more efficient respectively.

Improved targets may see a rise of new innovative products entering the market. Evidence may suggest that the creation of a competitive market, would improve performance and research within the industry. This in turn may perhaps produce higher specification construction materials, thus increasing energy efficiency. However, initially this could relate to higher capital costs.

Transitional Provisions

If Act Building Control is appointed and the initial notice/s submitted before 6th April 2014, the current (2010 Approved Documents) regulations will apply, providing that work commences within a twelve month time period.

Ultimately, the government is keen to ensure the growth of the house building industry, thus the transitional provisions will mean that only one plot on a site would need to commence to validate all the plots on the on the application under current Part L requirements.

Larger Home Extensions

For a period of three years, between 30 May 2013 and 30 May 2016, householders will be able to build larger single-storey rear extensions under permitted development. The size limits will double from 4 metres to 8 metres for detached houses, and from 3 metres to 6 metres for all other houses. These new larger extensions (i.e. if they extend between 4 and 8 metres, or between 3 and 6 metres) must go through the process of neighbour consultation scheme.

The process starts by submission of the written application with existing and proposed plans. If none of the owners or occupiers of any adjoining premises object to the proposed development, then the Council must not assess the proposed development. Instead, the Council confirms to the developer that prior approval is not required (or fails to issue a decision within 42 days). This indicates that the works would comply with the relevant legislation, and where possible, will indicate whether or not the works would comply with any of the other limitations or conditions.

If any of the owners or occupiers of any adjoining premises object to the proposed development, then the Council must assess the impact of the proposed development on the amenity of all adjoining premises (not just the adjoining premises which are the subject of representations), and must take into account all representations made as a result of the consultation letter. To be able to make this assessment, the Council may require the developer to submit further information. If the Council gives prior approval (or fails to issue a decision within 42 days), then this indicates that the works would comply with condition A.4.

If the Council refuses prior approval, then this indicates that the works would not comply with approved limitations or conditions. The developer would have the right to submit an appeal to the Planning Inspectorate against the refusal.