Written By Em

Em

Em Morley

5-Year Buy-to-Let Rates Yet Again at Record Low

Published On: March 6, 2018 at 9:23 am

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Categories: Finance News

Changes to the Stamp Duty rule were implemented back in April 2016, resulting in a 3% Stamp Duty levy on all buy-to-let purchases. This resulted in many landlords buying property in an attempt to avoid the extra tax.

Finance Expert at moneyfacts.co.uk, Charlotte Nelson, has said:

“Many borrowers rushed to make purchases in the first few months of 2016, to beat the Stamp Duty hike… Because of this, a substantial chunk of borrowers are likely to be remortgaging in the coming months.”

Looking at research from moneyfacts.co.uk, we can see from current rates that mortgage providers are aware of this, and changing their rates to attract this target audience. The research shows that the average five-year fixed rate has fallen to a record low of 3.43% (which was also the rate in October 2017).

It makes sense that the providers want to entice landlords into a five-year fixed rate, as it keeps clients with them for longer. If you as the landlord are happy with the rates, then you are also locking into the security that it won’t change.

There is always the possibility that rates may drop further, but, looking at how they have been changing in the last year, they seem to be already adequately lowered. In March 2017, the average five-year fixed rate was 3.77%. Fast forward to January 2018, we see them at 3.45%, and now here we are at the beginning of March looking at an average of 3.43%.

As always with mortgages, it is worth considering the other costs attached with that provider, such as arrangement fees. Interest rates are the main starting point for finding a mortgage that appears to be the best value, but being thorough can save you from missing out. As well as this, there are rules and regulations to adhere to, which are forever changing. Nelson also made the point:

“Despite all this good news for landlords, the market has significantly changed in two years and borrowers now have to work their way through a maze of extra regulation, as well as stricter lending requirements… It is more important than ever for landlords to seek financial advice to ensure they get the best possible option for them.”

Property Market Experiences a Steady February, Despite Extreme Weather

Published On: March 5, 2018 at 11:08 am

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Categories: Property News

Following a buoyant start to the year, the latest data from Agency Express’ Property Activity Index shows a continuation in steady activity for the UK property market.

Nationally, the number of new property listings rose by 2.7%, while the amount of properties sold soared by 15.5%.

While February’s figures are somewhat affected by January’s post-Christmas spike, the index’s historical data shows a year-on-year increase in new listings, but a minor decline in properties sold.

Looking at regional performances across the UK, all 12 regions included in the index recorded increases in the number of properties sold, with ten achieving growth in the amount of properties for sale.

February’s top performing region was Scotland, where the number of properties sold surged by a robust 49.5% and new listings grew by 38.1%.

The smallest increases in February’s index were recorded in the East Midlands. The number of new property listings increased by just 1%. Looking back at Agency Express’ historical data, we can see that this is the region’s smallest rise for February since 2009.

Regional hotspots in February’s Property Activity Index included:

New listings

  • West Midlands: +15.8%
  • Wales: +7.6%
  • North East: +2.9%
  • South West: +2.3%
  • North West: +2.1%

Properties sold

  • West Midlands: +27.8%
  • South East: +21.1%
  • Yorkshire and the Humber: +16.6%
  • North East: +16.5%
  • Wales: +16.1%

The only decreases in February’s index were made in East Anglia and the South East. Following a vigorous start to the year, new listings slowed across both regions. East Anglia recorded a decline of 5.5%, but was on par with figures seen in 2017. The South East dropped by 2.3%, marking the region’s first fall for February since the index’s first records in 2008.

However, the extreme weather experienced in these areas towards the end of the month may have had some impact on overall figure.

Stephen Watson, the Managing Director of Agency Express, comments: “February’s figures have by and large reported favourably across the nation, and, while some regions may have seen a slower pace than 12 months previous, activity remains steady.

“As we look forward into March, we anticipate that the weather conditions may have a further impact on the index’s figures for some regions, but are confident that normal pace will resume as the weather easies.”

Theresa May to Announce Initiatives for Tackling Housing Crisis

Published On: March 5, 2018 at 9:52 am

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Categories: Property News

Today, the Prime Minister, Theresa May, is to set out the Government’s most comprehensive plans to date with regard to tackling the UK’s housing crisis.

Supported by the Secretary of State for Housing, Communities and Local Government, Sajid Javid, and Dominic Raab, the Housing Minister, May will unveil a number of initiatives, including:

  • The creation of up to five new towns between Oxford and Cambridge, to create the UK’s own Silicon Corridor, an apparent Brain Belt.
  • Supporting transport infrastructure, including an expressway and enhanced rail services between the two cities.
  • The removal of decision-making from local councils that continually fail to build adequate homes, with the introduction of minimum housing targets for each area and a tough enforcement approach based on the delivery of those homes. 15 councils have failed to conclude their Local Development Plans and will, as a consequence, run the risk of being placed on the naughty step, with the Government intervening in them operationally.
  • A focus on providing geo-targeted affordable housing for key workers where there is a shortage of such stock.
  • Continued green belt protection.
  • An encouragement for developers to build upwards in cities.
  • A use it or lose it policy on land owned by developers with planning permission.

Russell Quirk, the Founder and CEO of online estate agent Emoov.co.uk, believes that the Government’s failure to deliver its aspirations of 300,000 new homes per year could become its downfall in the next general election, and these announcements have arrived with this in mind.

He explains: “While the Government’s struggle to build enough affordable homes has kept them in favour with UK homeowners, who continue to get richer as a result, but these voters are also getting older and inevitably will diminish in volume.

“The Conservatives managed just 187,000 of the 300,000 homes pledged last year, and even that’s up on previous years. If they continue along this path of failure where the younger generation is concerned, they run the risk of finally losing out to Jeremy Corbyn’s young populism at the next general election.”

He continues: “It is unlikely that anything will come of the latest in a long line of bold promises, but it should. For too long, the developers charged with building our homes have held us to ransom by land banking. At the same time, local councillors under pressure from NIMBYs across the nation would rather protect their own seat then take steps to solve the crisis on a local level.

“While no one wants to be put on the naughty step, it is about time we take the democracy out of the home building process and penalise those who don’t take the necessary action required to help solve it.”

Three-Quarters of First Time Buyer Mortgage Applications Complete

Published On: March 5, 2018 at 9:14 am

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Categories: Finance News

Almost three-quarters (74%) of first time buyer mortgage applications via intermediaries resulted in a completion during the fourth quarter (Q4) of 2017, according to the latest Mortgage Market Tracker from the Intermediary Mortgage Lenders Association (IMLA).

This compares with just over half (53%) a year earlier, as first time buyers benefitted more than any other customer group from improving access to mortgage finance during 2017.

The quarterly IMLA report, which uses data from BDRC, examines consumers’ success rate in securing a mortgage via the intermediary channel, by tracking their progress from initial expression of interest (seeking a decision in principle) through to completion. In doing so, it compares the fortunes of intermediaries dealing with first time buyers, home movers, remortgagers, buy-to-let borrowers and applicants for specialist loans.

Three-Quarters of First Time Buyer Mortgage Applications Complete

Three-Quarters of First Time Buyer Mortgage Applications Complete

Recent UK Finance data shows that first time buyer numbers reached a ten-year high in 2017. IMLA’s report suggests that this was helped by almost nine in ten (88%) applicants securing a mortgage offer in Q4 2017 for the third successive quarter, up from 73% a year earlier. More than four in five (84%) of those offers in Q4 went on to complete, compared to 72% 12 months before.

Across 2017 as a whole, 87% of first time buyer applications resulted in an offer and 81% of those went on to complete – both noticeable improvements on 2016. Overall, it meant that 71% of first time buyer applicants achieved their aim of securing a mortgage in 2017, compared with just half (50%) in 2016.

Encouragingly, the picture for first time buyers has improved without a noticeable change to the burden of mortgage repayments they are taking on. In December 2016, UK Finance data shows that average first time buyer mortgage repayments were equivalent to 17.4% of income. This remained largely stable throughout 2017 and actually fell to 17.1% of income in December 2017. The average loan-to-value (LTV) also reduced slightly, from 82.0% in December 2016 to 81.4% at the end of 2017, as first time buyers’ average borrowing remained stable as a proportion of the overall price paid for their homes.

Instead, improving product availability, persistently low interest rates and strong competition between lenders – along with cooling house price growth – have all helped first time buyers’ cause, along with the continuation of the Help to Buy equity loan scheme. IMLA’s data suggests that first time buyers’ fortunes have improved more than any category of borrower in the last year.

For every 100 applications, an additional 21 first time buyers completed on a mortgage in Q4 2017 compared with Q4 2016 (74 versus 53). The next biggest improvement in terms of access to mortgage finance was among specialist borrowers, with the completion rate rising by 12, from 61 per 100 to 73 in the final quarter of 2017.

Home movers saw the greatest quarterly improvement at the end of 2017, and were the only group to enjoy a greater success rate, with mortgage completions in Q4 (77 per 100 applications) higher than in Q3 (74).

Despite wider uncertainty in the UK’s economic outlook, the improving performance of the mortgage market last year meant that intermediaries have approached the New Year with confidence about their prospects for 2018.

Overall, 95% in Q4 2017 were confident about the outlook for the mortgage industry (unchanged year-on-year), while 56% were very confident about the outlook for the intermediary sector in particular – up from 52% a year earlier.

In terms of their own business’ activity, almost two thirds (64%) were very confident about the outlook in Q4 2017, up from 61% at the end of 2016.

Kate Davies, the Executive Director of the IMLA, says: “The mortgage market has proved itself to be resilient over the last year, and intermediaries have continued to play a vital role in joining the dots between lender supply and consumer demand. In particular, first time buyers have benefitted from widely available and competitively priced deals, even before the extra confidence boost of the Stamp Duty exemption announced in the Autumn Budget.

“It is encouraging to see that mortgage repayments have remained stable even as more first time buyers make the step up onto the housing ladder. With the Bank of England base rate on a slow upward trajectory, lenders remain firmly focused on rigorous affordability tests, so that borrowers do not overstretch themselves to achieve their ambitions.”

She continues: “At the same time, we need to be mindful that, as the latest English Housing Survey shows, more first time buyers are opting for loans of 30 years or more. This represents a shift in the dynamics of owning a home compared with previous generations: a fact emphasised by recent warnings from the Institute for Fiscal Studies about the decline of homeownership among younger adults.

“Mortgage lenders can play their part in supporting access for first time buyers, and our figures show they are clearly doing so. Our improving success in satisfying the finance needs of first time buyers throws the spotlight onto policymakers to ensure that pressures on the availability and affordability of housing in the UK do not put young households off applying in the first place.”

Extension of Mandatory HMO Licensing to Begin in October

Published On: March 2, 2018 at 9:41 am

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Categories: Law News

The Government has confirmed that the extension of mandatory House in Multiple Occupation (HMO) licensing will be introduced from 1st October 2018, subject to Parliamentary approval.

The regulations will replace the previous definition of an HMO, removing the three-storey rule and bringing purpose-built flats where there are up to two flats in the block into the scope of mandatory licensing.

Extension of Mandatory HMO Licensing to Begin in October

Extension of Mandatory HMO Licensing to Begin in October

From 1st October, properties that meet all of the following criteria will be subject to mandatory HMO licensing:

  • Is occupied by five or more persons.
  • Is occupied by persons living in two or more separate households.
  • And meets:
    – The standard test under section 254(2) of the Act.
    – The self-contained flat test under section 254(3) of the Act, but is not a purpose-built flat situated in a block comprising three or more self-contained flats.
    – Or the converted building test under section 254(4) of the Act.

Properties that fall into the scope of the new definition, but are already licensed under a selective or additional scheme, will be transferred onto the new scheme at no cost to the landlord.

It is estimated that the extension of mandatory HMO licensing will bring a further 177,000 properties – in addition to the existing 60,000 – under compulsory licensing.

Around 20,000 HMOs already licensed under selective or additional licensing schemes will be transferred into mandatory HMO licensing automatically.

The Ministry of Housing, Communities and Local Government (MHCLG) has also confirmed that, subject to Parliamentary approval, landlords with properties that meet the new criteria for mandatory HMO licensing will be required to submit an application by 1st October 2018, representing a seven-month informal period to become compliant.

Landlords who fail to apply for licences by 1st October will be committing a criminal offence from that date. Licences granted under the new definition will not come into force before 1st October.

Local authorities have a duty to raise awareness of the changes and to accept applications in advance of this date. To help them in this, the Government will soon by publishing guidance targeted at local authorities, but also useful for landlords, to help everyone understand the new requirements.

As per the Government’s response to the licensing consultation in January, further regulations setting out new mandatory licence conditions are also expected.

The Government will introduce mandatory conditions stipulating the minimum size of rooms that may be used for sleeping in licensed HMOs.

A mandatory condition will also be brought into force that requires the licence holder to comply with their local authority scheme (if any) for the provision of facilities for the proper disposal and storage of domestic refuse.

We will keep you up to date with all of the developments to licensing conditions at Landlord News.

Landlords, You’re Invited to Take Part in Biggest Government Survey for a Decade

Published On: March 2, 2018 at 9:04 am

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Categories: Landlord News

Buy-to-let landlords and letting agents working in the private rental sector in England are being invited to offer their views in the biggest Government survey for a decade.

The Ministry of Housing, Communities and Local Government has asked NatCen, Britain’s largest independent social research agency, to contact more than 100,000 landlords and agents for the survey.

“The more landlords and agents who take part, the more accurate the results will be,” NatCen reports.

Landlords, who will be asked to provide information about their tenants and their experience of the private rental sector, will be selected from those who are registered with the three Government-approved tenancy deposit schemes: the Tenancy Deposit Scheme (TDS), The Deposit Protection Service (The DPS) and mydeposits.

Once landlords have been invited to take part in the survey, they will receive a letter or email invitation, containing a unique six-digit code and web link that enables them to complete the survey online.

They will be asked to select answers from a range of questions on different topics, including lettings and tenancy policies and practices, landlord finances and taxes, future investment plans, willingness to let to different types of tenant, the benefits system, energy efficiency, and safety, as well as awareness of and compliance with Government requirements.

NatCen claims that the English Private Landlord Survey will be “the most authoritative evidence source on the profile and views of private landlords and their agents in England”.

The results, which will be presented to Government ministers and officials, as well as professionals and commentators in the private rental sector, will help inform future Government policy on the lettings market in England.

We encourage all English landlords to get involved and offer their views, to help improve the private rental sector for future investors, agents and their tenants – get involved in the survey!