Legal News

New research from Lloyds Bank has shown that more homeowners moved house in 2014 as a result of cashing in accumulated equity in their homes.

Lloyds Bank says that a total of 365,400 people moved home in 2014 – the highest annual figure for people moving home since 2007.

The trend is the result of people needing or wishing moving to a larger home, helped by the equity they have acquired in their existing home as a result of rising property prices. Those who were helped by the buoyant property market include homeowners still living in the first property they had bought and needing to move to a larger family home.

The coalition government’s Help to Buy scheme launched its first phase in April to help families wishing to buy a larger property – the second phase launched in September aimed to help first-time buyers wishing to step on the property ladder and buy their first home.

Low mortgage interest and 5% deposits under Help to Buy fuelled demand for affordable homes for first-time buyers across the UK. Help to Buy take-up was especially high outside London. In London, the average house price is now around £500,000 and the upper limit for Help to Buy is £600,000. There are signs that property prices in the capital are now stabilising – and even falling in some parts of London.

Since 2007, there has been an 8% year-on-year increase in the number of people moving to a larger property, say analysts for Lloyds Bank – and because of the demand for first-time buyer homes, “second steppers” in the property market may now be sitting on an additional £10,000 of equity in their homes accumulated in the last year.

Lloyds Bank Mortgages Director Andy Hulme said:

“The resulting higher levels of equity in their property are providing home owners with more funds to finance the purchase of their next home.

“A steady rise in property values in 2015 should further ease the constraint on many of those who bought their first home at the peak of the market in 2006 and 2007 – enabling more of them to become second steppers.”

Lloyds Bank now estimates the average second stepper has £76,131 in equity in their existing home – allowing them to put down a 25% deposit on their next property.

On average, second steppers moving from their first home will pay £299,131 for their next property – and a three-bedroom detached house is their second home of choice.

Most second steppers want to move house after becoming stuck in their starter home because of the economic downturn – or to accommodate a growing family.

Salary levels for second steppers have also made their second property slightly more affordable than it would have been ten years ago, says Lloyds Bank. In 2004, second stepper homes cost seven times a salary, compared with 6.7 times a salary in 2014.

In 2014, existing homeowners paid an average £83, 302 deposit on their second home, which they bought at an average price of £252,064.

Duncan Lewis Housing Solicitors

Duncan Lewis is a leading firm of housing solicitors and can offer homebuyers competitively priced conveyancing services, including guiding first-time buyers through the conveyancing process.

Duncan Lewis is also a leading firm of Legal Aid solicitors and can advise existing homeowners on issues such as debt management and mortgage repossession.

Duncan Lewis also advises private sector landlords on issues such as disrepair, health and safety law for landlords – such as Gas Safety –
and landlord and tenant disputes.

For expert legal advice on housing law for homeowners and homebuyers, call Duncan Lewis housing solicitors on 020 7923 4020.