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Em Morley

Busiest quarter of 2019 to date for equity release market, according to latest report

Published On: October 30, 2019 at 10:47 am

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Categories: Property News

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The latest report from the Equity Release Council reveals an 8% rise in Q3 of 2019 as older homeowners unlock nearly £11m of property wealth a day.

The highlights of the report include:

  • Equity release products have provided £988m of funding to homeowners over the age of 55 during Q3. This is up by 8% from £911m in Q2.
  • 33,000 new customers have used property wealth to support their finances so far this year, with support from regulated financial and independent legal advice.

David Burrowes, Chairman of the Equity Release Council, said: “As a nation with an aging population and a growing need to support longer lives, it is important not to overlook property wealth in modern retirement planning conversations. 

“Today’s equity release market is offering new solutions to fund later life, by combining rigorous consumer protections with more product choices and flexibility to help people meet their financial needs and goals.

“The result of buying property and making mortgage payments during their working lives is that bricks and mortar become many people’s single biggest financial asset when they reach later life. Industry, regulators and government must continue to promote and encourage lifelong savings habits and support consumers to take a joined-up approach to later life planning. 

“One that takes a holistic view about consumer choices, needs and outcomes and considers all wealth and assets into account.”

equity release market

Will Hale, CEO of equity release advisory firm Key, comments: “Today’s figures highlight the resilience of the equity release market in tough economic conditions and how the fundamental issues of low pension savings, substantial property wealth and an aging population continue to drive customer demand and attract new sources of funding to the market helping support product innovation.

Economic and political uncertainty has meant growth has been more subdued in 2019 when compared to 2018 with many customers adopting a wait and see approach. However, with this uncertainty dragging on for longer than anticipated we are starting to see more customers come off the fence. 

“New products, rates at historic lows and the launch of free advice propositions, means that there has never been a better time for customers to consider how their property wealth could unlock a better retirement.

“Looking to the future, the fundamental drivers of the market remain strong with over-55s predicted to make up a third of the population within the next 20 years.  That points to further evolution of the market to meet the needs of an ever more diverse range of customers.

“As such, we see equity release sitting within a broader later life lending sector which needs to continue to adapt across both advice provision and product design to enable people to use their property wealth to support themselves and help families.

“Specialist advice remains vital as older homeowners will always need expert support when making significant financial decisions around how to use their property wealth in the best and most appropriate way.”

Steve Wilkie, managing director of Responsible Life, comments: “Customers have reaped the rewards from intense interest rate competition in the lifetime mortgage market and this, in turn, has bolstered a boom in activity in the past quarter.

“Taking out a lifetime mortgage has long been a serious consideration for many retirees who want their property to work for them and deliver money for home improvements and adaptations, or ‘living inheritance’ for their family, but products are now more attractive and competitive than ever before.

“Strong competition in interest rates have been sparked by a record number of sales in the bulk annuity sector, an industry that secures predictable, low-risk returns to fund retirement income by investing in lifetime mortgages. 

“Customers are the beneficiaries, as they can enjoy all-time-low rates along with growing product numbers which makes it even easier for them to find a deal perfectly suited for their needs.” 

BBC Inside Out (London) uncovers opportunistic tenants subletting via Airbnb

Published On: October 30, 2019 at 9:54 am

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This week, the BBC aired a regional show in London highlighting the growing number of tenants subletting via short-term rental platforms without their landlords’ permission.

The show shared the story of a landlord who ended up £10,000 out of pocket after his tenants ‘professionally’ sublet his property in Bloomsbury on Airbnb.

tenants subletting

Despite the tenants having a 22-month assured shorthold tenancy (AST), it was discovered during a periodic inspection that they were subletting the property. The tenants had consented to the inspection by letting agency Base Property Specialists ltd. The agent arrived early to find them checking a family into a property.

After looking further into the situation, the agent found the property on Airbnb, listed as a single dwelling and as two separate bedroom rooms. There were also more than 70 booking reviews for the property.

Base Property contacted the tenants to inform them that they were breaching a number of licensing laws and instructing them to remove all listings. This included any other sites they may have been using to advertise the property. They were told to remove the key safe they had installed and made good any damage that had been caused.

Two courses of action were provided to the tenants: to re-occupy the property themselves or surrender under the contractual Early Termination Agreement, which at that point came to £4295.

The tenants decided to stay, removing the key safe and repairing the damage, but neighbours were still reporting people coming and going. When the agent arranged for a plumber to fix a maintenance issue, he was told by the occupants, a Russian family, that they did not speak English and were renting the property.

Commenting on the case, Kristjan Byfield of Base Property, said: “One thing I found extremely disappointing was Airbnb’s refusal to take any action whatsoever. When we contacted them and provided evidence that the “hosts” were not the legal owners of the property and were in breach of the landlord’s mortgage and buildings insurance terms, local licensing laws, and both short-term let and HMO licensing, their response was take it up with the tenants.” 

It was at this point that the tenants were refusing to communicate with their agent. Despite continuing to host on Airbnb and using a professional laundry service to prepare beds, they denied their actions. Contractors hired to fix a leak were refused access, causing further damage to the property.

Kristjan Byfield called in the help of Paul Shamplina of Landlord Action who served the tenants with a Section 8 notice and thereafter, the Landlord Action solicitors issued possession proceedings.

Paul comments: “Kristjan and his team had done everything correctly. They had obtained thorough references, carried out regular property inspections and even given the tenants the opportunity to put the situation right when they were caught out.

“Unfortunately, unauthorised use for short lets is a growing problem, as the Westminster Planning Enforcement team will discuss on the show, and councils are struggling to cope with the volume of cases. 

“At Landlord Action, we always have a number of sub-letting cases at any one time, particularly from landlords whose tenants have sub-let via Airbnb without consent.”

Both Paul and Kristjan agree that there are lots of Airbnb hosts that do a fantastic job, do not cause disruption to neighbours and comply with all necessary licences.  However, they do feel that Airbnb should be doing much more to prevent unauthorised hosts.

Kristjan said: “We have had a number of cases where the landlords agree for the tenants to sub-let, and with proper communication and agreements, it can work very well. 

“However, 95% of issues such as this case could be eradicated if Airbnb invested in some simple technology to cross-reference the name of the host with the owner’s name, via the Land Registry, and then simply obtained proof of consent to sub-let if those names do not match.”

Paul added: “Their unwillingness to take responsibility and make improvements is damaging to the private rented sector.”

Would a murder or paranormal activity put you off purchasing a property?

Published On: October 28, 2019 at 11:19 am

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New research has revealed the most common turnoffs for Brits looking for a property to purchase.

This research from regulated property buyer Good Move shows that over half (58%) of those involved with its survey would be put off purchasing a property if there had previously been a murder at the property. 44% would reject a house if there had been reports of paranormal activity.

However, more practical issues seem to be higher up on their list of concerns, such as a shared garden (73%), signs of damp (75%) or cracks (73%) and having a short leasehold remaining (76%).

The biggest red flag for those looking to buy is noisy neighbours, with a huge 85% of people saying this would put them off purchasing a property.

The top 10 issues putting house buyers off purchasing a property:

  1. Noisy neighbours (85%)
  2. Short leasehold remaining (76%)
  3. Signs of damp (75%)
  4. A shared garden (73%)  
  5. Signs of cracks on the walls (73%)
  6. Front Door opening onto a main road (70%)
  7. No parking (69%)
  8. No garden (66%)
  9. Smelly (63%)
  10. Busy or high-speed roads nearby (62%)  

Over 40% of UK house buyers may have admitted that they would not be put off by the fact that a murder took place onsite, but this would cause them to expect a discount of almost a third (32%) of its market value.

The research also highlighted that buyers would expect a 30% reduction if there had been reports of paranormal activity…

The top five features that buyers would expect the biggest discounts for are: 

  1. Existing tenants (34%)
  2. Murder (32%)
  3. Paranormal Activity (30%)
  4. Pets left behind in the property (26%)
  5. Being next door to a cemetery (25%)

Ross Counsell, director at Good Move, said: “Although everyone has a different idea of the perfect home, it’s clear from our survey that certain things will put off most people. 

“On the bright side, some of these put-offs are easy to address, so if you are looking to sell your house, make sure you sort out small things like cracks and damp. 

“These little actions can make a huge difference and help you to make your house more attractive to buyers.”

Buy-to-let landlords urged to ‘ride out’ approaching recession

Published On: October 28, 2019 at 10:32 am

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Landwood Property Auctions has advised property investors to sit tight during the potential recession that is upon us in the UK and give it time before making any decisions about leaving the market.

The company has seen an increase in properties going into receivership over the past few months, a reluctance from banks to lend as much as they had been a year ago and the construction sector also struggling.

Mark Bailey, Director of Landwood Group, has noted: “It is harder for property owners to let business space; for domestic landlords to find tenants… there’s no doubt there is a squeeze on.

“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.

“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change – domestically and globally. People err to the negative whenever there is change on the horizon – until events transpire and the scales balance out. The big issue is uncertainty.”

His advice to property investors, whether you are a commercial property owner or a domestic landlord, is to keep going and wait to see what happens over the next six months before making a decision. He points out to look at your borrowings and not over-stretch yourself. 

Cash buyers, in particular, may benefit from such a downturn in the market, so long-term investors in this position should keep an eye open for a ripe time to buy.

Bailey concludes: “For the rest of us, it’s time to batten down the hatches and ride out the storm – see you on the other side.”

What’s important for older renters choosing a property?

Published On: October 25, 2019 at 9:36 am

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Location is by far the most important factor when choosing a property to live in, according to Knight Frank’s survey of homeowners and renters over the age of 65.

56% of these respondents highlighted this as a priority.

When it comes to choosing a location, 28% responded that their decision was guided by whether the rent or purchase price of the area was within their budget. This was followed by living close to family and friends (17%), proximity to transport links (13%) and access to green space (10%).

The survey also found that 37% of those aged over 65 find the prospect of living in a senior living community attractive.

Commenting on the survey, Jamie Turnbull, Business Director at Girlings Retirement Rentals says, “This survey reveals what’s important for older people when considering a move in later life and shows that location, affordability and being close to family and friends are the most important factors.

“Interestingly the survey also shows that people are open to the idea of living in a retirement community. This mirrors our experience and we are finding more older people are choosing to downsize and rent in a specialist retirement development in their 60s and 70s.

“Benefits include freeing up capital in their home and being able to move somewhere they have always wanted to live. It also enables people to move to a more manageable and age-appropriate property, and no longer have the worry about the upkeep and ongoing maintenance of a home.”

Knight Frank says that the number of people aged 65+ living in the UK is forecast to increase by 20% (12 million in total) by 2027. The need to provide suitable housing options for these people is more important than ever, it says. In particular, they have highlighted an existing senior’s rental market.

The survey found that a fifth of renter respondents aged 65+ said they are renting privately because they downsized due to life events or changes in household composition. 17% also stated that they are renting because they don’t have enough for a deposit.

The responsibility of owning a home is the reason 14% decide to rent, and 13% do so because it allows them to live in locations where they couldn’t afford to buy.

RLA suggests pro-growth measures to avoid looming rented housing supply crisis

Published On: October 25, 2019 at 8:29 am

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A rented housing supply crisis could be on the horizon, as a new survey shows more landlords are selling properties than buying, whilst demand continues to increase.

According to the Residential Landlords Association (RLA)’s survey of over 2,700 landlords, almost 25% have seen demand for private rented property increase over the last three months. Only 15% said that demand had fallen.

However, 41% have said they haven’t noticed a change.

According to this research, over the next 12 months, we will see 31% of landlords sell at least one property. Only 13% said they plan to buy at least one.

These figures have also been supported by statistics from other organisations:

  • Rightmove’s data shows a shortage in private rented housing together with a strong demand from tenants has led to record asking rents across most of Great Britain.
  • The Royal Institution of Chartered Surveyors (RICS) has warned of an acceleration in rent increases over the next five years as a result of this demand for housing outstripping supply.

A programme has been designed by the Government over recent years to cut investment in private rented housing through various tax increases. It hopes to encourage more houses to be available for purchase by owner-occupiers.

The latest figures, however, show that this strategy was a failure. The RLA is now calling on the Government to adopt pro-growth measures. It suggests scrapping the Stamp Duty levy on the purchase of additional properties where landlords add to the net overall supply of homes available, including bringing long-term empty homes into use.

David Smith, Policy Director for the RLA, said: “Those who argue that a smaller private rented sector is good for tenants wanting to buy a home are plain wrong. The Government’s policies are choking off the supply of homes to rent whilst demand remains strong. This is only making life more difficult and potentially more expensive for those looking for somewhere to live.”

“Without an urgent change of course and the introduction of pro-growth policies the situation will only become worse.”