Written By Em

Em

Em Morley

Landlords take Advantage of New Mortgages

Published On: January 6, 2012 at 5:05 pm

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Categories: Finance News

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Landlords have been encouraged by a recent announcement from specialist buy-to-let mortgage provider Paragon Mortgages. The organisation has announced the launch of 50 new buy-to-let mortgage products into the market.

The majority of the products, 44 in total, are intended to appeal to professional landlords. In addition, existing criteria has been altered to appease intermediaries and to efficiently locate the ideal product for lenders.

Landlords take Advantage of New Mortgages

Landlords take Advantage of New Mortgages

 

Six of the new products are designed to appeal to small-scale landlords, with them being available though Paragon’s sister company Mortgage Trust. Furthermore, a fresh change giving increased flexibility to minimum income levels has also been provided.

Rising demand

John Heron, Managing Director of Paragon Mortgages, believes tenant demand for rented property will rise in the next 12 months. He says the private rental sector will therefore come under increased pressure as a result.

Heron suggests that the private rental sector needs to change to be able to cope. He says: “In order to do this, professional landlords need access to products that meet their specific requirements so that they can grow their business.”

Furthermore, he says: “The private rental sector needs to expand this year to meet the growing demand,” before stating: “We hope that the creation of these new products will help intermediaries increase their offering to landlords and write more quality business.”[1]

Encouragingly, it looks like borrowers are being offered more mortgage choices, in comparison to last year. Figures from Mortgage Brain suggest that there are in excess of 14,000 mortgage deals available, almost double the 7,519 available 12 months ago.[1]

[1] http://www.landlordexpert.co.uk/2012/01/06/uk-landlords-get-some-better-mortgage-options/

 

 

 

 

 

Many Resort to Payday Loans to Pay Mortgages or Rent

Published On: January 6, 2012 at 3:56 pm

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Homelessness charity Shelter have revealed that almost one million people have taken out a payday loan with a 4,000% interest rate, during the last year in order to pay their rent of mortgage.

Shelter also found that a further six million rely on other types of credit, including unauthorised overdrafts, other loans, or credit cards, to help pay their housing costs.

YouGov carried out a survey for Shelter last month, where 4,014 people were asked if they had used these forms of credit to help with rent or mortgage payments during the last 12 months. One in seven respondents replied yes. Shelter described the findings as revealing “a spiral of debt that people are falling into in order to keep a roof over their head”1. They urged struggling borrowers to seek advice urgently.

Many Resort to Payday Loans to Pay Mortgages or Rent

Many Resort to Payday Loans to Pay Mortgages or Rent

Shelter’s Chief Executive, Campbell Robb observed the results: “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home. Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable.”2

“It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimate homelessness,” explains Robb. “Every two minutes someone in Britain faces the nightmare of losing their home.”1

In addition, Martin Lewis, of moneysavingexpert.com, has explained: “The UK is the crock of gold at the end of the rainbow for the world’s payday lenders. They’ve been regulated out of other countries and jump for joy at our lax supervision.

“That’s why these 4,000% APR lenders are exploding across British high streets. Yet these astronomical APRs aren’t the real danger; that comes from the rollover. This is where people can’t repay at the end of the month and compound interest kicks in. Many struggling with core rent or mortgage commitments will struggle to repay payday loans on time too.”2

Housing minister Grant Shapps said: “The sheer scale of the global slowdown has left many hard working families struggling to make ends meet. So I would urge anyone who is getting into difficulty to seek help in getting their finances back on track.

“Assistance can be sought by searching online for the Government’s mortgage help website or by visiting organisations who can provide free, independent guidance such as Citizens Advice. The quicker households act to get help, the more options they will have available to them.”1

It is hoped that less and less people will turn to these methods of payment, as Lewis explains: “While it is an obvious temptation to grasp these loans as a lifeline, in the long run it may hurt more than help.”1

1 http://www.theguardian.com/money/2012/jan/04/payday-loans-cover-mortgage-costs

2 http://www.justlandlords.co.uk/news/Millions-Turn-to-Payday-Loans-to-Pay-for-Mortgages-or-Rent-1061.html

 

 

 

 

 

Landlord Fined over Unsafe Property

Published On: January 6, 2012 at 3:45 pm

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Categories: Landlord News

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A landlord has been fined by authorities for leaving one of his properties in an unsafe condition.

Landlord Fined over Unsafe Property

Landlord Fined over Unsafe Property

Mohammed Hussain Chauhdry was found to have left a privately rented home needing several repairs in Colindale.

He has been found guilty under the Housing Act and ordered to pay a fine of £1,750, as well as court costs of £2,176.10 at Hendon Magistrates Court.

The large, five-bedroom property was in need of a new roof covering, alongside changes to the staircase. The stairs were collapsing upon inspection, and were held together by an unsafe solution.

Environmental health officers paid numerous visits to the house before Mr Chauhdry was prosecuted last month.

Private landlords hold a responsibility to keep their rental properties in a safe condition. These obligations ensure that no risk to the health and safety of occupants arises. The Cabinet Member for Community Services, Councillor Richard Cornelius, commented that landlords have equal duties to the tenants as tenants have to their landlord.

This particular case is a prime example of the landlord consciously leaving a home in a dangerous state, and being punished as a result. The condition of a property can also have consequences on let property insurance premiums.

 

 

 

 

 

 

 

 

 

Tenants Increasingly in Rent Arrears

Published On: January 6, 2012 at 3:11 pm

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Categories: Landlord News

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Figures from a survey conducted by Templeton LPA have made for unwelcome reading for Britain’s landlords.

Tenant Arrears Tracker

Templeton LPA’s latest Tenant Arrears Tracker has indicated that the number of tenants facing extreme financial difficulty rose significantly in the last quarter of 2011. Almost 11,400 more tenants are in arrears of two months or more in comparison to the same period in 2010.[1]

Despite a seemingly low 9.3% of all rent being late or unpaid during November, the number of tenants owing two or more months rent is rising rapidly. This said, the number of tenants in severe rent arrears makes up only 2.4% of all private rented properties across England and Wales.

Two speed market

“The soaring cost of renting has created a two speed market,” remarks Paul Jardine, Director of Templeton LPA.

 

Jardine also suggests: “The overall tenant population has coped relatively well with rising rents and soaring living costs,” and it just the minority of renters “falling deeper and deeper into payment difficulties.” He does however, acknowledge that “the number of severe arrears cases is rising.”[1]

Jardine also remarks: “While the wider tenant mix has changed since the mortgage market downturn with a greater number of financially sound yet frustrated first time buyers, a growing number of tenants are seeing their job prospects affected by the UK’s economic malaise.”[1]

Evictions

Additional figures taken from the Tenant Arrears Tracker show that a greater number of tenants are being evicted from rental properties. During the final quarter of 2011, 24,966 tenants were served eviction notices, an increase of 11% on the previous year. Worryingly, evictions were up 5.4% in quarter three of 2011 in comparison to quarter two.[1]

Tenants Increasingly in Rent Arrears

Tenants Increasingly in Rent Arrears

 

More pleasingly, buy-to-let mortgages more than three months in arrears fell by 7% in the final quarter of last year, in comparison to the previous quarter. This showed a yearly decline of 17%.[1]

Jardine feels: “The growing level of severe tenant arrears has yet to filter through into mortgage payment problems for landlords.”

He observes that while mortgage rates remain low, “there has also been a change in landlords’ behaviour.” Jardine now feels that “rental income has become the most important component in an investor’s annual return.”[1]

He goes on to state: “As a result, many landlords are being less lenient with tenants facing initial payment problems, and are looking to use court orders to replace tenants quickly in expectation of finding a financially sound substitute and potentially an increased rent, given the strength of competition for rental property in many areas of the UK.”

Jardine also feels: “A growing number of landlords are exploiting higher rents to set aside slush funds for future arrears and void periods, or signing up to rental indemnity schemes.”[1]

Gloomy outlook

Looking to the forthcoming year, Jardine provides a stern and gloomy forecast. He anticipates: “Given the economic challenges the UK faces and the worsening labour market, we anticipate that both overall arrears and severe arrears will rise in 2012 and this will feed into increased tenant evictions and hamper a growing number of landlords’ ability to meet their monthly mortgage costs.”[1]

[1] http://www.landlordexpert.co.uk/2012/01/06/uk-tenants-in-financial-difficulty-is-increasing-rent-arrears-for-uk-landlords/

 

 

 

 

 

 

 

Paragon Launches 50 New Buy-to-Let Mortgages

Published On: January 6, 2012 at 2:25 pm

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Mortgage provider Paragon has recently launched 50 new products into the buy-to-let market. All 50 products come with less stringent qualifying criteria.

Of the new products, 44 are classified under the Paragon Mortgages brand. These products have been implemented specifically for the professional landlord and have been designed to assist even those with the most complicated needs.

The remaining six products have been launched under the Mortgage Trust brand. These products are designed to appeal to landlords on a smaller scale.

Division Between North and South Widens

Published On: January 5, 2012 at 3:41 pm

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Categories: Property News

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Figures from Zoopla have revealed that the average house prices in Britain have remained mostly level in 2011. However, the division between north and south has widened.

Division Between North and South Widens

Division Between North and South Widens

At the end of 2011, the average house price was £221,331. This figure is down by 0.23% (£854) compared to the same time the previous year.

Regional contrasts have seen the largest gap during 2011, however. In London and the South East, property prices have increased, whilst the north has seen a decline. Average house prices in London are now 2% higher than last year, standing at £416,890. In the North East, house prices dropped by 6% in 2011, to £156,659.

This gap in property prices between the north and south is at its widest since recordings began in 1974. Every region has seen prices fall, however, since a peak in the housing market in 2007.

For homeowners who bought their property five years ago, these figures highlight the collapse of their house’s value.

Nicholas Leeming from Zoopla notes that Londoners will continue to see strength in the market, with a high demand for a limited amount of properties, which is boosting house prices. He also commented on the North East, explaining that 2012 does not show signs of change in this area. However, it is apparent that if the overall economy elevates, then this should filter through to the property market.

The jobs market is vital to the future strength of the housing sector. If the rate if unemployment is to rise sharply, then house prices are likely to fall further.

Nationwide, the highest percentage increase was in Scotland, where prices rose by 7%. Prices here still remain significantly lower than London, with an average of £164,844.