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Em

Em Morley

Londoners have least disposable income

Published On: April 20, 2015 at 1:55 pm

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Categories: Finance News

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New research has indicated that the assumption that all Londoner’s are wealthy is far from the truth.

According to new research from Hampton’s International, the rise in house prices and large mortgage and bill payments have left families with a lot less disposable cash than the UK average. 

Capital pains

Findings from Hampton’s research suggest that the average young family in the capital has only around £347 left per year in disposable cash after mortgage and other essential bills have been paid. This leaves them with around 22 times less disposable cash than seen as average within Britain.[1]

 

In addition, the research shows that it has become 77% more difficult to purchase a property in London since 2010. The findings show that only the West Midlands has also seen a fall in house affordability since the last general election, with other regions experiencing a rise.[2]

 

Hampton’s Ability to Buy study, which is devised of a points-based system, measuring house prices, interest rates, incomes and inflation, suggests that it was 85% harder to purchase a property in London during the twelve months to quarter three of 2014. The same study found that it was 73% more difficult in the year proceeding quarter four of 2014. This was put down to a 17% increase in house prices, coinciding with a 9% rise in childcare costs and a 1.6% decrease in average household incomes.[3]

 

Unaffordable

The report stated that the average four-person family in London earns a total gross household income of £79,571. This means that they accrue £22,546 per annum after tax, childcare and features such as food and utility bills have been taken into account. Hampton’s have found that once mortgage costs have been taken from this, which leaves the average household with £347 per year.[4]

 

All findings were based on the average family consisting of a male and female in full time work and two children receiving full-time childcare. Additionally, the figures were based on families with an 85% loan-to-value mortgage.[5]

 

Improvements

Throughout the UK, the ability to buy was found to have fallen by 3% during 2014. However, Hampton’s report suggests that overall, affordability is up by 2% from the last General Election. The South West was found to be the best place in terms of improvements in the ability to buy, showing an increase of 9%. This was attributed to small house price growth of 5.5%, the biggest wage growth in the country at 4.5, alongside less spending on transport.[6]

Londoners have least disposable income

Londoners have least disposable income

 

Fionnuala Earley, analyst at Hampton’s International, stated that, ‘the ability to buy a home today is on average 2% better than it was at the time of the last general election.’ However, Earley went on to say that, ‘despite some of the lowest mortgage rates on record, falling food and oil prices and some increase in wages, ability to buy is worse off than this time last year.’[7]

 

Earley believes that this is, ‘largely a result of house price growth outperforming incomes.’ She warns however that, ‘for working families with children the growing costs of childcare eats into the amount of money left at the end of the month to service a mortgage.’[8]

 

Hampton’s found that the ability to buy varied by different household type. In the twelve months to quarter four of 2014, it become 1% harder to afford a property for working couples without children and 6% harder for a working family with two offspring. First-time buyers were found to have a 2% increase in difficulty of buying a property than at the same time in 2013. However, they were 11% more likely to be able to get onto the property ladder since the last election.[9]

 

This rise in first-time buyer affordability could be put down to features such as the Government’s Help to Buy Scheme. Furthermore, young buyers may have been greatly assisted by funds generated by their parents or grandparents downsizing their own property, or by changes to the pension law.

[1-9] http://www.telegraph.co.uk/finance/property/house-prices/11546239/Think-Londoners-are-rich-Heres-how-much-cash-is-left-after-mortgage-costs.html

 

 

 

Landlords Must Protect Deposits in the Next Two Months or Risk a Fine

Published On: April 20, 2015 at 11:01 am

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Categories: Landlord News

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Buy-to-let landlords have until 23rd June 2015 to register with a Government-approved deposit scheme or face a penalty.

Thousands of investors will risk a £3,600 fine unless they protect their tenants’ deposits in the next two months.

The Government is offering a 90-day amnesty period for landlords who have not yet put their tenants’ deposits into an approved scheme.

The fines for not registering are unlimited and will be calculated at three times the initial deposit. The average amount paid by tenants upon moving into a property is £1,200.1

It is estimated that one in three of the 1.5m private landlords in England and Wales have not yet registered with a deposit protection scheme, despite legislation being brought in in 2007.

However, not all of these landlords will need to register, as university lets and licence agreements are excluded. A license agreement is different to a tenancy and includes lodgers.

Any investors with an assured shorthold tenancy (AST) must register with one of the three Government-approved services. Scottish landlords are not covered by the legislation.

Without even considering the fines, landlords who do not register will hold no power in regard to a tenant leaving at the end of an agreement. If a dispute arises, landlords will be seen to have failed their responsibilities.

Landlords Must Protect Deposits in the Next Two Months or Risk a Fine

Landlords Must Protect Deposits in the Next Two Months or Risk a Fine

Emma Humphreys, from Charles Russell Speechly solicitors says that the landlords most likely to be caught are those who have had the same tenants for several years.

She explains: “These landlords may not use a letting agent, which would notify them of the need to register deposits, and may not have been keeping an eye out for the regulations when they were introduced in 2007.

“Of course, there is no excuse for new landlords not complying with the law. But many long-term buy-to-lets where the tenant and landlord have a good relationship may not realise they need to register with a scheme.”1

These landlords may not know that they need to register the deposit or have taken one at all.

The deposit protection legislation was introduced eight years ago to mediate disputes at the end of a tenancy.

When the legislation was launched in April 2007, it was not determined if landlords with existing tenants would need to register, but a later court ruling confirmed that all tenants should have their deposits protected.

In 2013, a court case ruled that a tenant who moved in before the law came into effect could not be forced to move out at the end of the tenancy because the landlord had not protected the deposit.

The amnesty period, which started on 26th March under the Deregulation Act, will simplify the “muddied” duties of landlords, thinks the National Landlords Association’s (NLA) Richard Lambert.

He says: “There are now a large number of deposits that need protecting despite not previously needing to be, and it’s likely that many landlords won’t even be aware of what they need to do.

“Landlords who still hold a deposit should protect it if they haven’t already done so, which will ensure that you can legally regain possession of a property [if you need to].”1

Who needs to register?

Most buy-to-let properties have an AST, which means that the landlord must register the deposit. There are some exemptions, for example, university halls or a lodger living in the landlord’s home.

After taking a deposit, landlords have 30 days to register with the Deposit Protection Service (DPS), mydeposits, or the Tenancy Deposit Scheme (TDS).

If a dispute arises between landlord and tenant, the deposit will be protected until the problem is solved.

The DPS is free to use, however landlords do not hold the money. mydeposits allows landlords to hold the money, but costs £24 per deposit with a joining fee of £20. The TDS is free to sign up to and costs £21.95 per deposit, but also lets landlords hold the deposit.

1 http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11532831/Landlords-have-two-months-to-register-deposits-or-face-3600-fine.html

Year on Year rise in Buy to Let Mortgages

Published On: April 20, 2015 at 10:21 am

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Latest figures have shown that buy-to-let mortgages rose steadily in the twelve months from February last year.

Rise

Statistics from the Council of Mortgage Lenders have revealed that 15,900 buy to let loans were taken out in February. Despite this figure being down 13% from January, this signaled an 11% rise from February 2014.[1]

 

These loans totalled £2.2 billion, down 12% from January but up 16% from February last year. Buy-to-let remortgaging followed a similar pattern, falling 19% from January, to 8,400. However, this was a substantial increase of 23% from twelve months ago.[2]

 

Overall value of these loans amounted to £1.3bn, a very large increase of 31% year-on-year.[3]

Year on Year rise in Buy to Let Mortgages

Year on Year rise in Buy to Let Mortgages

 

Paul Smee, director general of the Council of Mortgage Lenders, said that the rise in buy-to-let activity was due, ‘almost completely to remortgaging which is typically strong in the buy-to-let market.’[4]

[1-4] http://www.landlordtoday.co.uk/news_features/Buy-to-let-mortgages%3A-steady-rise-year-on-year

 

 

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

Published On: April 20, 2015 at 10:01 am

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Categories: Finance News

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HSBC could cause a price war in the mortgage market after launching a five-year fixed-rate deal at 1.99%.

This latest offering is the first ever home loan of this type with an interest rate less than 2%. However, borrowers will need a 40% deposit.

From today, HSBC will be introducing the 1.99% rate five-year fix. This is the lowest ever rate on a mortgage of this length. If buyers wish to benefit from this offer, they will need to raise a deposit of 40% of the property’s purchase price, or have equivalent equity in their home. The loan also has a £1,499 fee.

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

HSBC Offers Five-Year Fix Mortgage at 1.99% Rate

David Hollingworth, from mortgage brokers London & Country, says: “HSBC has broken quite a significant boundary by launching a rate below 2%. It looks exceptional value and shows just how hard lenders are prepared to fight for new business.”1

HSBC already offers the lowest rate in the five-year fixed-rate market, at 2.19%. The new rate will replace this and cost £15 a month less on a £150,000 25-year loan.

The bank will put other lenders under pressure to cut their rates to compete. The next cheapest deal is 2.24% from the Co-op.

Mortgage specialist at Middleton Finance, Daniel Bailey, notes: “The five-year deals have been hotting up for some time and I think this will push other lenders to respond, which is good news for borrowers.”

Although, experts believe that HSBC are more likely than other providers to turn down applications, causing aspiring buyers to miss out on the offer.

Bailey says: “I’ve had a lot of clients unable to get HSBC deals. One was recently turned down because HSBC could not see evidence of their weekly grocery spend on their current account statement. That’s because the borrower always paid their Tesco bill using their credit card, but the bank turned them down anyway.”1

Mortgage broker Coreco’s Andrew Montlake explains: “The headline rate is extraordinary, but there will be lot of people who won’t get this as HSBC is not the easiest lender to get through.”

Nationwide, Halifax, Lloyds Bank and Tesco all cut their rates on a number of different loans last week. However, rates rose last month for a short period.

Montlake says: “While rate cuts are welcome, the problem is that they still only benefit the same people. There are thousands of people including the self-employed, contract workers and older borrowers who can no longer get a loan because mortgage lenders have tightened their criteria more than they need to. Those are the people who now need some good news.”1

1 http://www.theguardian.com/money/2015/apr/18/hsbc-five-year-fixed-mortgage

 

 

Average Property Prices at Record High of Over £286,000 in April

Published On: April 20, 2015 at 9:08 am

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Record high house prices around the UK, particularly in London, were driven by a lack of sellers and an increase in buyers, according to Rightmove.

In April, the average asking price of properties coming onto the market reached an all-time high of more than £286,000. This increase was fuelled by a rise in buyers and a shortage of sellers, found the UK’s biggest property website.

Rightmove’s report emphasises the housing crisis in Britain and arrives as political parties address the market in their election manifestos.

The property portal recorded its busiest ever month in March, the highest volume of visitors since its 2000 launch. The amount of people searching for homes grew 20% year-on-year. During the same period, the number of people listing their property on the website dropped 4% in the first three months of the year, compared to 2014.1

Director of Rightmove, Miles Shipside, says: “Record high housing demand and an undersupply of homes have delivered a new all-time high in the price of property coming to market in the month before the election.

Average Property Prices at Record High of Over £286,000 in April

Average Property Prices at Record High of Over £286,000 in April

“The high cost of housing is a big concern for many home-hunters, so the contents of the respective party manifestos and well thought-out sustainable solutions to the lack of affordable housing supply will be high on many voters’ agendas too.”

Last week, we reported David Cameron’s plan to expand the right to buy scheme to 1.3m families living in housing association properties. Read more about the proposal: /how-would-the-conservatives-right-to-buy-work/.

Critics of the Conservatives’ announcement believe that the scheme could worsen the housing crisis, causing prices to inflate.

Commenting on the average house price in April, which rose 4.7% over the year, Shipside says that they have been forced up by hopeful sellers hesitating to put their homes on the market and more landlords investing in properties. He thinks that the long-term rise in prices has been fuelled by a shortage of house building.

He says: “Failure to meet house building targets since the 80s, 90s and 00s to match forecast housing demand has been a major factor in upwards price pressure both in the property sales and private rented sectors.”1

Around the country, asking prices increased month-on-month in every region in April compared with March. They only fell annually in Wales. Monthly growth in Greater London and the North East were the highest in England, where the average asking prices were £594,585 and £146,361 correspondingly.1

Since the last general election in May 2010, the average asking price in London has risen by around 50% (£195,000). The north of England has experienced a 3.7% increase (£6,374).1

Separate research from property company Hamptons International revealed that hopeful homeowners’ ability to purchase a home has declined in the past year, but it had improved in the five years since the last election.

Hamptons’ report, which focused on income, property prices and the cost of living, created an ability to buy index, which indicated the main reason some people have more money to put towards a home than they did five years ago as record low mortgage rates.

However, this has not been enough to help some. For a family with two children and one parent working full-time and the other part-time, their ability to buy has decreased by 6% in the last year, meaning they are 5% worse off than at the previous election.1

Director at Hamptons, Fionnuala Earley, explains: “For working families with children, the growing costs of childcare eats into the amount of money left at the end of the month to service a mortgage.”1

1 http://www.theguardian.com/society/2015/apr/20/april-house-price-average-at-all-time-high-of-over-286000

New scheme promotes landlord accreditation

Published On: April 17, 2015 at 3:52 pm

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Categories: Landlord News

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A new scheme is promising tenants the opportunity to find out relevant information on their private landlord.

 

The, ‘National Register of Accredited Landlords’ was launched by the National Landlords Association’s (NLA) CEO Richard Lambert at the at the Chartered Institute of Housing’s yearly South West Conference.

 

Accreditation

Although the scheme is voluntary, the NLA insist that their register will give tenants the chance to see if their landlord is part of any accredited organisation. The NLA also stated that their scheme, ‘aims to raise the profile of accreditation and highlight those who are committed to best practice.’[1]

 

Additionally, the NLA has a vision that by the year 2020, all of their members will become accredited to a recognised scheme. This outlook has been brilliantly branded their, ‘2020 Vision.’

 

At present the NLA work with 58,000 private landlords and have 27,000 cash paying members. Their CEO Richard Lambert believes that, ‘accreditation is a badge of knowledge that landlords should shout about.’ As such, he feels that tenants should be encouraged to, ‘check their prospective landlord and find out whether they have reached accredited status.’[2]

New scheme promotes landlord accreditation

New scheme promotes landlord accreditation

 

Mr Lambert suggests that there is, ‘more pressure on improving standards in the private rented sector than ever before.’ He wants the NLA to, ‘lead the way for landlords to become accredited,’ something that he sees as a huge challenge as at present, there is, ‘no fundamental need to do so.’[3]

 

Furthermore, Lambert is looking to change the opinion of landlords for the better, as he feels that, ‘too often the landlord community is unfairly tarred with the brush of illegality,’ something that, ‘isn’t an accurate picture of private renting.’[4]

 

 

[1-4] http://www.24dash.com/news/housing/2015-04-16-New-scheme-launched-for-tenants-to-check-their-private-landlord