Time

A year of changes




Last year was certainly one of Changes, to quote David Bowie, whose death in January 2016 was, for many, a portent of the tumultuous year ahead in the economic and political arenas.

The 3% rise in stamp duty on second homes and buy-to-let purchases was greeted with some dismay. By the end of the year, buy-to-let sales had dropped to 64% according to one national estate agent.

The director of policy at the British Property Federation accurately summarised the mood in the industry after the Budget announcement by stating: “Many institutional investors will find it difficult to fathom why something so good – adding to the housing supply – is taxed so highly.”

One of the effects of these changes was to cause a surge in mortgage applications from companies. Given that commercial loan origination requires more onerous diligence processes, title insurance became an even more relevant consideration.

Meanwhile, the post-Brexit property market caused a number of property funds – including Standard Life, Aviva and L&G – to cease trading in order to ward off redemption requests amounting to as much £5bn according to some estimates. By the end of November, however, all were back in business. 

Later in the year, Theresa May’s warnings that she will trigger Article 50 by the end of March – in addition to concerns that a ‘hard Brexit’ would entail an exit from the single market – meant that the larger banks were adopting a more cautious approach to lending.

While the mainstream lenders voiced concern about future access to the European market, smaller challenger banks – which have traditionally tended to focus on the domestic market – saw Brexit as a means of increasing their growing foothold on the lending market. This newfound optimism was based on the premise that Brexit would remove the need for new regulations surrounding the amount of capital that they needed to hold. 

In an open letter to the Treasury Select Committee chairman, the heads of seven of the UK’s challenger banks urged UK policy makers to use Brexit as an opportunity to set their own financial services rules to reduce the current burdens placed on the challenger banks. It remains to be seen how accommodating the government will be.


Philip Hammond announced a raft of housebuilding initiatives in his Autumn Statement

The housing market remained resilient despite the unrest felt in the wider economy. This was fuelled partly by a further base rate cut by the Bank of England in the summer, but mainly by the ongoing shortage of housing.

Government initiatives to increase housebuilding were a prominent feature of Philip Hammond’s Autumn Statement, with news of £1.4bn of funding for affordable housing, in addition to a relaxation of previous restrictions on grant funding by allowing housing providers to deliver a mix of homes for affordable rent as well as low-cost ownership. Meanwhile in September, the government announced that a £2bn accelerated construction fund would be set up to allow publicly owned brownfield land to be available for development, along with a £3bn home building fund to allow housebuilders to build a further 25,000 homes by 2020.

Title insurance has played a significant role in this evolving market place. Throughout 2016, Titlesolv’s developer policy – accompanied by its web-based services – has been consistently proven to speed up transaction times and offset time lost through increased regulation.

Titlesolv is the trading name of London & European Title Insurance Services Ltd authorised and regulated by the Financial Conduct Authority.

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