Despite property sales in the UK at a six year high, conveyancers are now warning that new tougher rules on mortgages could stall growth.
Suzanne Marsters, conveyancer, and chartered legal executive at North West law firm, Maxwell Hodge, said: “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.”
Property sales in the first three months of 2014 has hit a six year high with the Royal Institution of Chartered Surveyors (RICS) reporting recovery on a national scale.
,RICS branches of estate agents and valuers in England reported average sales of 23 properties each in the first quarter of this year. This is up from a low of 12 in 2009. RICS also reports prices on the rise with experts particularly optimistic about rises in the East Midlands and North West.
However buyers will now face probing questions over their spending habits in one of the biggest shake ups of the mortgage market.
The new Mortgage Market Review (MMR) rules, brought in with a view to curbing excessive lending, could lead to lenders offering smaller loans or in some cases being turned down for mortgages.
Suzanne said: “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 home owners potentially being required to go through an advised process and new assessment checks.
According to Suzanne, 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.
She added: “The Royal Institution of Chartered Surveyors predicts that UK house prices will rise by 6% 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.”