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Em Morley

Lenders and Brokers Failing to Contact Clients About BTL Changes

Published On: June 25, 2018 at 8:01 am

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Categories: Finance News

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Regions with lowest void periods revealed by landlord survey

According to the National Landlord’s Association (NLA), mortgage lenders and brokers are being too silent regarding the Prudential Regulatory Authority’s (PRA) changes to buy to let lending.

The NLA claims that despite the regulatory changes to lending criteria in addition to the application process for portfolio landlords, more than 55% remained oblivious.

Discoveries from the NLA’s quarterly Landlord Panel, reveal that just eight per cent of landlords expressed that their lender had been in contact regarding these changes. Furthermore, only 16% of landlords had been contacted by their broker.

Almost 68% of landlords claimed to have had no contact from either their lender or broker regarding such changes. Instead, findings show that lenders and brokers concentrated their efforts on larger portfolio landlords, with 26% of portfolio landlords reporting that their broker had been in contact, and nine per cent confirming that their lender had made contact.

Richard Lambert, CEO at the NLA commented:
“The PRA’s changes will greatly affect the ability of landlords to find new finance and continue to provide good quality affordable housing to those who need it”.

The NLA says that it’s vital landlords are supported through the changes, having issued broad advice earlier in the year urging landlords to contact their mortgage broker or bank before committing to any new property or finance.

“We hope that that the reason such a significant number of landlords haven’t been contacted is because their existing deals are simply not yet close to expiry. However, it’s in lenders’ and brokers’ own interests to speak to landlords about the changes sooner rather than later, otherwise, it could mean a missed opportunity in terms of new business.
“If landlords don’t get the right support and information about how the changes will impact their existing loans, then it could mean higher finance costs that many just won’t be able to absorb”.

One Stone, Seventeen Birds: Seventeen Letting Agents Fined by One Council

Published On: June 22, 2018 at 9:26 am

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Categories: Law News

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Failure to comply with legislation has led to 17 letting agents being fined. Two branches of Foxtons have been named and shamed among this 17, in addition to a letting agent that is now in liquidation.

Between July 2016 and the end of this month, Tower Hamlets, in London, underwent an investigation of 401 letting agents and landlords. The purpose of this investigation was to monitor compliance with regulations including fees transparency and evidence of deposit protection.

It was referred to by the Council, as a crackdown on hidden fees.

We remind all letting agents to comply with their responsibilities on fees, particularly ahead of the ban on charging fees to tenants

Though specific information wasn’t exposed, Tower Hamlets revealed that a total of 27 letting agents, landlords and managing agents have all received a combined fine of a staggering £150,000. Fines issued ranged from £1,000 to £10,000.

What happens to those who have received fines?

Those who received fines are immediately required to make the necessary changes to ensure that they are compliant with legislation requirements. To ensure that these actions have been implemented, the Council  is due to carry out further inspections.

A spokesman for Tower Hamlets commented: “We are committed to ensuring people wanting to live in our borough are not exploited by rogue letting agents or landlords. We will not tolerate individuals or organisations actively trying to mislead our residents.

“The majority of letting and managing agents in Tower Hamlets successfully help people to settle within our diverse and growing borough. It’s disappointing that a small number are acting dishonestly and misleading people looking for a new home.”

Commenting on the protection for residents is Cllr Sirajul Islam: “We are protecting our residents by ensuring they have all of the information needed prior to renting their property. Transparency from letting agents, managing agents and landlords is imperative to ensure the process is fair for everyone involved.”

London is Dead for Buy-to-Let, but Manchester and Liverpool Stand Strong

Published On: June 22, 2018 at 8:57 am

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Categories: Landlord News

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Rumours may have been circulating over the profitability of investing in London property for some time, but one expert is now insisting that the capital is dead for buy-to-let, with Manchester and Liverpool standing strong.

Jonathan Stephens, the Managing Director of property investment firm Surrenden Invest, has spoken out in response to a range of new statistics released over the past week.

Firstly, estate agent Cushman & Wakefield has reported that homeowners in Manchester have seen the value of their properties surge by 34% in the three years to July 2017, while those in Salford have witnessed growth of 38% over the same period. The national average is 30%.

Cushman & Wakefield’s findings are supported by the results of property portal Zoopla’s latest Sentiment Survey, which found that more than eight in ten homeowners (84%) expect property values to increase in their area, up by 14% since the survey was last taken in November 2017.

London is Dead for Buy-to-Let, but Manchester and Liverpool Stand Strong

Surrenden Invest’s new Westminster Works apartments in Birmingham

Zoopla also suggests that homeowners believe that the value of their properties will rise by a significant 6.9% over the next six months, which is the largest increase in consumer confidence since the first half of 2016.

Despite higher property prices, Greater Manchester remains an attractive investment proposition to landlords, with increasingly strong rental yields leading to annual returns of between 11-20%.

The average annual rental yield in both Manchester and Salford, according to Cushman & Wakefield, is currently 5.3%.

Julian Cotton, the Associate Director of the firm, says: “Manchester benefits from a particularly active investor market, with more than 52% of the entire housing stock lying in the private rented sector.

“Considering the historically high rates of house price inflation in both Salford and Manchester, initial rental yields remain strong at present prices. This resilience is a clear indication of underlying strong tenant demand, as rates of rental inflation come near to keeping pace with house price growth.”

At the same time, Liverpool has been named as offering some of the most profitable postcodes for buy-to-let in the UK.

Stephens explains: “The key hotspots for sales activity are without a doubt the UK’s regional cities: investors are doing their research and looking at Birmingham, Manchester and Liverpool in particular – and even further north to Newcastle.”

He believes: “The London market is really stagnant, and many investors are voting with their feet (or rather, their wallets) and passing over it altogether. There are still deals to be done there for those buying at big discounts, but the market is over-hyped following a huge over-supply of new build stock. The ongoing standoff between developers and private sellers means that it’s likely to remain stagnant until we see a price correction. Add to that the fact that there’s little, if any, prospect of meaningful capital growth in London, and that yields there have been notoriously low for years now, and it’s easy to see why regional cities are coming to the fore.

“Five years ago, investors were incredibly skeptical about any UK property investment outside of London. Now, they’re coming to us having already chosen a regional city. Investors are incredibly well informed, and thus most have no intention of buying in London. Instead, they are looking at yields of 5-6% net in cities like Manchester, Liverpool and Birmingham, along with the prospect of capital growth in the region of 5-10% year-on-year. The rental market is growing in these cities too. Manchester, for example, has seen rental market growth of 4% over the past year. This is all underpinned by significant economic growth in the UK’s regional cities.”

Landlords, what is your sentiment regarding investment hotspots across the UK? And is London really dead for buy-to-let?

Government Publishes Key HMO and Selective Licensing Changes for Rental Properties

Published On: June 22, 2018 at 8:08 am

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Government Publishes Key HMO and Selective Licensing Changes for Rental Properties

New guidance for landlords was published yesterday by the Ministry of Housing, Communities and Local Government. The idea is to further protect tenants from poor living conditions and follows legislation introduced last month.

From 1st October 2018, any landlord who lets a property to five or more people – from two or more separate households – must be licensed by their local housing authority.

The move is likely to affect around 160,000 Houses in Multiple Occupation (HMOs), and will give councils grounds for further action when it comes to the small minority of landlords who rent out sub-standard or overcrowded homes.

Housing Minister, Heather Wheeler MP, said: “Everyone deserves a decent and safe place to live.

“Today’s new guidance for landlords will further protect private renters against bad and overcrowded conditions and poor management practice.”

The guidance document includes details on the mandatory licensing to smaller HMOs as it currently stands, as well as introducing minimum bedroom sizes for adult or two-adult rooms.

Government Publishes Key HMO and Selective Licensing Changes for Rental Properties

Government Publishes Key HMO and Selective Licensing Changes for Rental Properties

Review of selective licensing changes to take place in spring 2019

The government has also announced it will review how the selective licensing scheme is currently used, and how well it is working. This is all with the idea of continuing to improve standards in the private rental sector.

In areas where selective licensing applies, landlords must apply for a license if they want to rent out a property. In Nottingham for example, landlords in most areas of the city need a license for each property they rent out, to ensure it meets safety and quality standards, as well as .

The proposed review will see independent commissioners gather evidence from local authorities and bodies representing landlords, tenants and housing professionals.

The review’s findings will be reported in spring 2019, with updates on the progress in autumn of this year.

Chief Executive, David Cox of ARLA Propertymark commented on the proposal to review how selective licensing is used:

“Licensing means councils spend all their time administering schemes, rather than enforcing against rogue, criminal landlords – a fact which has been proven time and time again over the last decade. Implementing standards for minimum bedroom sizes means small, cheap bedrooms will be taken off the market at a time when there’s an acute housing shortage.

“This will increase costs for other tenants living in the property, and means those who need or want these small, cheap bedrooms will be left without anywhere to live.”

He added: “At a time when the government is concerned with rising rent costs, all its policies are just increasing costs for landlords, fostering a private rented sector where financial burdens due to ever-changing legislations will keep rising.”

Momentum for May’s Lettings Market

Published On: June 21, 2018 at 9:41 am

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Categories: Lettings News

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UK Finance has revealed a small increase in lending to first-time buyers compared to the previous year, whereas remortgaging has softened slightly after a busy start to the year.

Recent data provided by Property Activity Index Reveals a nationwide growth in both ‘to let’ and ‘let’ properties.

The national figures for new listings ‘to let’ have climbed again, up to 3.6% whilst properties ‘let’ attained 2%. Yet, across a three-month rolling period, ‘let’ figures continue to fall at -0.9% and historical records expose greater levels of activity in previous years.

Upon observation of the individual regions recorded by the Property Activity Index, eight of the 12 regions have reportedly witnessed an increase in properties ‘to let’ in addition to six reported increases in properties ‘let’.

Regarding properties ‘to let’ the regional hotspots included:

• South West 14.50%
• West Midlands 14.40%
• Central England 12.60%
• London 11.30%
• North East 10.90%

Hotspots for properties ‘Let By’ are as follows:

• West Midlands 31.00%
• Central England 14.00%
• Scotland 13.50%
• London 7.10%
• North East 3.40%

At the top of the leaderboard was West Midlands for this month’s overall, recording vigorous figures in both new listings ‘to let’ at 14.4% along with ‘let’ at 31%. Central England also follows suit, with listings, at 12.6% and properties ‘let’ at 14%. The peak in activity established a record best May for the region.

The Biggest declines were recorded by the North West and London. Declining for the second month in a row, figures for properties ‘let’ in the North West dropped to -7.5%. As it stands in London, the figure of new listing has fallen for the first time in six months, at -11.3%. Again, historical data shows greater levels of activity for both regions in 2017.

Commenting on the latest index, Stephen Watson, Managing Director of Agency Express commented:
“This month we have seen some overall growth for the UK lettings market with some regional pockets recording record bests. As we move into June which is traditionally a buoyant month we would expect to see a further increase in pace.”

Mortgage Repayments now Cheaper than Rent in All Parts of the UK, Reports Santander

Published On: June 21, 2018 at 8:53 am

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Monthly mortgage repayments are now cheaper than rent costs in all parts of the UK, so long as first time buyers can raise the deposits they need to get onto the property ladder, according to a report by Santander.

The bank claims that households could save an average of £2,268 per year through purchasing a home, rather than renting one.

Santander used recent rent price data, taking the average monthly cost of £912 per household, and compared it with monthly mortgage repayments of £723 for the typical first time buyer.

This gives homeowners an average saving of £189 per month, or £2,268 a year, compared with private tenants.

The bank’s research is based on Land Registry figures, which report an average first time buyer house price of £213,462. It also assumes a 76% loan-to-value (LTV) mortgage at 2.48%, with no fees.

The study includes a regional breakdown, indicating that the largest annual savings are in London, at an average of £3,468, while the smallest difference is in the East of England, at £516 per year.

Santander addressed the issue of how first time buyers would raise a deposit to buy their own homes, which it put at a staggering average of £51,905.

When asked how they would save such funds, 38% would move back in with their parents and 21% would give up alcohol to raise the deposit needed.

Miguel Sard, the Managing Director of Mortgages at Santander, comments on the findings: “Many first time buyers understandably focus on the challenge of saving for a deposit and wonder how they will afford a property. However, it is often assumed that, when you purchase a property, you will be under greater financial pressure, and our research shows the reverse is true.

“Of course, buying a property is a major financial investment with upfront costs to consider, but, long-term, the financial benefits can be significant.”

He adds: “With annual savings averaging well over £2,000, this can really mount up over time and, of course, once the mortgage is paid off, you have a valuable asset to show for it.”

Positively, the Santander research takes monthly mortgage repayments into account when calculating the difference between owning and renting a home. Another recent study by developer Strata looked only at deposits and fees when making its bold statement. Read more on the story here.