New mortgage measures could impact on property recovery

Despite property sales in the UK at a six year high, conveyancers are now warning that tough new rules on mortgages could stall growth.

Despite property sales in the UK at a six year high, conveyancers are now warning that tough new rules on mortgages could stall growth.

"We have seen conveyancing work double in the last six months in our region alone which is a direct indicator of the recovering property market. However the tougher rules being brought in for mortgage applicants could threaten this recovery," said Suzanne Marsters, Conveyancer, and Chartered Legal Executive at North West law firm Maxwell Hodge.

Royal Institution of Chartered Surveyors (RICS) has reported property sales in the first three months of 2014 have hit a six-year high.

RICS branches of estate agents and valuers in England reported average sales of 23 properties each in the first quarter of this year, up from a low of 12 in 2009.

However, buyers will now have to face probing questions over their spending habits in one of the biggest shake ups of the mortgage market.

The new Mortgage Market Review Rules, brought in with a view to curbing excessive lending, could lead to lenders offering smaller loans or in some cases prospective home buyers being turned down for mortgages.

Suzanne continues: "The MMR rules are in one sense a great initiative because they are about ensuring people taking on mortgages can afford them both now and in the future, however, with the market slowly recovering they could also impact on property growth and the economic benefits that brings."

The new rules will not only affect first time buyers but those looking to remortgage, with existing homeowners potentially being required to go through an advised process and new assessment checks.

These measures, together with declining interest only mortgages and the rising property prices, could well shut out first time buyers and young families from the housing market for some time, leaving them in a position where they have to rent.

"The Royal Institution of Chartered Surveyors predicts that UK house prices will rise by six percent for the next five years pushing prices up by 35% by 2020. So we are left with a recipe of a shortage of housing, increasing prices and it being more difficult for buyers to get a mortgage. The recovery in the market has been strong in the last few months, but it needs to be to deal with these potential issues and avoid another period of stagnation."

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