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Em Morley

Landlords Recommended to Invest in Key Northern Cities

Published On: January 31, 2018 at 10:25 am

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Categories: Landlord News

Landlords looking to achieve the best returns on their investment should look at buying properties in key northern cities, where the gap between asking and achieved prices is narrowing, according to buy-to-let specialist Sequre Property Investment.

Key northern cities such as Manchester and Birmingham are increasingly skewed towards sellers, as strong demand from buyers continues to place upward pressure on house prices, the firm says.

Graham Davidson, the Managing Director of Sequre Property Investment, comments: “As expected, key northern cities are dominating UK growth.

“Manchester and Liverpool have remained among the strongest contenders, with other cities such as Nottingham and Birmingham also among the top areas for property growth.”

He adds: “For buy-to-let investors, these [key northern cities] are the cities to be looking at over the next 12 months.”

Locations in the south are experiencing the opposite trend, which is why many buy-to-let investors are currently refraining from purchasing property in London and other southern cities.

Listing prices across the capital have experienced greater levels of discount, averaging now at 4%, compared to 0.5% in 2014. Discounts of up to 10% were registered in inner London, where house price declines are being witnessed.

This means that the capital is increasingly becoming a buyers’ market, despite its weak 1.8% house price growth rate.

Davidson continues: “Those who haven’t already moved away from the London market are advised to act quickly – not only have the rental yields remained virtually non-existent, but capital growth is also declining.”

Landlords, are you encouraged to invest in key northern cities, or are you sticking to the southern locations that you’ve always known? With so many reports indicating that northern investments could be more profitable for buy-to-let landlords, a move up north may be a wise choice.

We will continue to keep you up to date with rental yields data at Landlord News.

Mortgage Lending Fell to Three-Year Low after Interest Rate Hike

Published On: January 31, 2018 at 9:54 am

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Categories: Finance News

Britain’s housing market lost momentum last month, as mortgage lending dropped to its lowest level in almost three years, following the Bank of England’s (BoE’s) first interest rate hike since the global financial crisis.

At the same time, lending to consumers – something that the BoE is watching closely – sped up for the first time in four months.

Britain’s economy lagged behind stronger growth in much of the world last year, as the rise in inflation triggered by June 2016’s Brexit vote and weak wage growth ate into households’ disposable income.

Mortgage Lending Fell to Three-Year Low after Interest Rate Hike

Mortgage Lending Fell to Three-Year Low after Interest Rate Hike

The latest data, from the BoE, showed the greatest increase in the interest rate on existing mortgages since 2010. That spells further weakness in the housing market during 2018, when the BoE is expected to raise interest rates again, economists believe.

“While the increase in interest rates in November was just 0.25% and mortgage rates are still at historically very low levels, there does appear to have been some impact on house buyers’ psychology,” notes Howard Archer, of economic consultant EY Item Club.

The BoE will signal next week whether it is likely to raise interest rates again in May, or wait for clearer signs of what kind of trade deal Theresa May is likely to extract from the EU.

A Government report seen by Buzzfeed on Monday showed that Britain will be worse off under each of the three broad scenarios for the country’s future relations with the EU than if we’d have stayed.

The BoE report shows that the level of mortgage lending for house purchase in December dropped to 61,039 – the lowest since January 2015 – down from 64,712 in November.

However, consumer lending increased by a stronger than expected £1.52 billion in December, pushing up the yearly growth rate to 9.5%, from November’s 9.3%.

Consumer credit growth had been slowing gradually since it peaked at almost 11% in November 2016.

Net mortgage lending also rose by a stronger than expected £3.68 billion.

The BoE has confirmed that there is no British debt bubble, but has told banks to set aside more money against the risk of bad loans.

After a Christmas holiday marked by tight consumer spending, there were signs that households felt a bit more optimistic in early 2018, possibly encouraged by signs that inflation has peaked and wage growth might gather pace.

John Eastgate, the Sales and Marketing Director of OneSavings Bank, comments on the data: “The ongoing state of political and economic uncertainty continues to weigh heavily on consumer confidence, and anyone wavering on a decision to apply for a mortgage may well have been dissuaded from doing so by the base rate increase, so it is hardly surprising that approvals decreased.

“The removal of Stamp Duty for first time buyers is unlikely to make a material difference, and, with low wage growth and higher inflation, it would be fair to expect a generally subdued tone to continue. Renting remains the only viable option for many, and it is important that the Government should recognise the importance therefore of the private rented sector.”

First Time Buyers Capitalised on December Housing Slump

Published On: January 31, 2018 at 9:13 am

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Categories: Property News

First time buyers capitalised on the typical December housing slump at the end of last year, according to the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

First time buyers 

Overall, demand for housing dropped by 20% in December, with an average of 268 prospective homeowners registered per member branch – down from 333 in November.

Echoing this, the number of sales agreed per estate agent branch fell to an average of five – the lowest since December 2014, when there were also five agreed, and down from seven in November.

However, first time buyers took it upon themselves to take advantage of the quieter month, as the percentage of sales made to the group increased to 32%. This is the highest rate seen since September 2016, when it stood at 32% again, and up from 27% in November.

Housing supply

The supply of available properties remained fairly stagnant in December, falling by just one to an average of 33 per branch. This is down by 20% on December 2016, when agents were typically marketing 41 properties per branch.

Property sales

The time taken between offers being accepted and exchanging contracts reduced marginally in December. 4% of sales went through in under four weeks, compared to an average of 1% from January to November 2016.

The percentage of transactions that took longer than 17 weeks to exchange fell in line with this, from 7% in November to just 4% last month.

Mark Hayward, the Chief Executive of NAEA Propertymark, comments on the report: “We see this year in, year out. Buyers take a backseat in December to enjoy the festivities, while sellers keep their homes on the market in the hope that someone will take interest and make an offer.

“What we don’t usually see is first time buyers capitalising on this slump and using it to their advantage – 44% of our members think that the Chancellor’s Stamp Duty cut for first time buyers will encourage more to make offers, and it looks like that’s what we’re starting to see. Hopefully, this enthusiasm won’t falter when the second and third time buyers come back onto the market in the New Year and competition hots up again.”

Landlords Confident of Coping with Rising Interest Rates

Published On: January 30, 2018 at 10:52 am

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Categories: Landlord News

Landlords are confident of coping with rising interest rates, according to the latest PRS Trends report from Paragon, which is based on interviews with 201 experienced investors.

However, the study also found that landlords are continuing to reduce borrowing, as levels of gearing reached an all-time low in the fourth quarter (Q4) of 2017.

The average loan-to-value (LTV) ratio of investment property portfolios was 35% in Q4 2017 – the joint lowest level recorded in over 15 years – as recent fiscal and regulatory changes targeting landlords have dampened investor motivation to take higher LTV buy-to-let mortgages.

Meanwhile, when asked at what point they would need to sell properties in the event of rising interest rates, landlords appeared confident of coping with increased outgoings, with more than half (51%) saying that any decision to sell properties is not dependent on mortgage interest rates.

Of the remaining 49%, the average mortgage interest rate at which landlords said they would consider selling properties is 5%.

More than four out of ten respondents (43%) said that any decision to increase rent prices is not dependent on mortgage interest rates, and slightly more than half (51%) said that any decision to refinance properties was not dependent on mortgage interest rates.

John Heron, the Managing Director of Mortgages at Paragon, comments: “Contrary to the view held by some, there is strong evidence that gearing levels across portfolios are very low in the buy-to-let sector, with a peak of 43% LTV across all types of landlords in the last 15 years. Since that peak in 2012, gearing has been on a downward trend and currently sits at an all-time low of 35%.

“In response to fiscal changes over the last two years, landlords are clearly less willing to take higher LTV mortgages and borrow more, whilst regulatory changes, though welcomed by lenders, have constrained the market in its ability to offer higher LTV mortgages.”

He continues: “There is no evidence to suggest lending to landlords has been anything other than sustainable. With low levels of gearing, landlords appear well positioned to withstand the higher interest rates that the markets are anticipating, which is good news for buy-to-let and the wider private rented sector.”

New HMO Licensing Rules Expected in October, Housing Minister Confirms

Published On: January 30, 2018 at 10:32 am

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Categories: Law News

The Government is planning to introduce new rules on licensing Houses in Multiple Occupation (HMOs) this October, the Housing Minister, Dominic Raab, has confirmed.

The Government set out its proposals to extend HMO licensing last year, involving mandatory licensing for properties, regardless of height, that are occupied by five or more people from two or more households.

Currently, mandatory HMO licensing only applies to properties with three or more storeys that are occupied by five or more people from two or more households.

The new rules still have to be approved by Parliament. However, in response to a written question by Liberal Democrat MP Wera Hobhouse, Raab set out a timetable for their introduction.

He explained: “The Government proposes to extend the scope of mandatory HMO licensing, so that a licence is required for HMOs with five or more occupiers.

“We published our response to our HMO reforms consultation in December 2017, and we plan to lay the necessary regulations before Parliament shortly with a view to bringing them into force (subject to approval) in October 2018.”

New rules are also set to come into force setting minimum bedroom size requirements for HMOs. As part of the licensing requirements, local councils will be able to make sure that only rooms meeting the standard are used for sleeping.

Rooms used for sleeping by one adult will have to be no smaller than 6.51 sqm, while those slept in by two adults will have to be larger than 10.22 sqm. Rooms slept in by children of ten years or younger must be no smaller than 4.64 sqm.

Landlords, we will keep you up to date with all changes to HMO licensing rules, ensuring that you understand your obligations.

Check back to Landlord News for all of the latest updates and advice on lettings law.

Hundreds of Thousands of Tenants Living in Squalid Rental Housing

Published On: January 30, 2018 at 9:48 am

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Categories: Tenant News

Hundreds of thousands of young tenants in England are living in squalid rental housing that is likely to leave them requiring medical attention, according to analysis of Government figures by The Guardian.

Rats, mouldy walls, exposed electrical wiring, leaky roofs and broken locks are among the issues blighting an estimated 338,000 homes rented by people under the age of 35-years-old that have been deemed so hazardous that they are likely to cause harm.

This means that over half a million people are starting their adult lives in such conditions, amid a worsening housing shortage and rising rents, which have increased by an average of 15% across the UK in the past seven years.

Visits by The Guardian to properties where tenants are paying up to £1,100 per month in rent have revealed holes in external walls, insect-infested beds, water pouring through ceilings and mould-covered kitchens.

A 30-year-old mother near Bristol said that her home is so damp that her child’s cot rotted. A 34-year-old woman in Luton told of living with no heating, as well as infestations of rats and cockroaches, while a 24-year-old mother from Kent said that she lived in a damp flat with no heating and defective wiring for a year, before it was condemned.

Dan Wilson Craw, the Director of tenant lobby group Generation Rent, says: “Young adults have very little option but to rent from a private landlord, so we should at least expect a decent home in return for what we pay.

Hundreds of Thousands of Tenants Living in Squalid Rental Housing

Hundreds of Thousands of Tenants Living in Squalid Rental Housing

“Relying on cash-strapped councils to enforce our rights means that too many of us are stuck with unsafe housing.”

The extent of the impact on young people emerged as a cross-party bid to give tenants new powers to fight back against rogue landlords gathers strength.

The Government has backed a private member’s bill going through Parliament that would allow tenants to take direct legal action against their landlords, instead of relying on local authorities to do so.

The issue has gained greater political impetus in the wake of the fire at Grenfell Tower, where tenants had complained publicly about safety conditions, but nothing was done before the blaze claimed 71 lives last June.

Seven months before the blaze, Ed Daffern, a member of Grenfell Action Group, warned of “dangerous living conditions” and wrote in a blogpost: “Only a catastrophic event will expose the ineptitude and incompetence of our landlord.”

Government data suggests that as many as 2.4m people in England live in rental homes, both in the private and social sectors, with category 1 hazards. That includes 756,000 households living in private rental properties – almost one in five of the whole private rental stock – and 244,000 households in social housing.

The worst affected regions are the East and West Midlands, which feature large numbers of Victorian homes, where about 250,000 rental properties suffer from category 1 hazards, according to the figures compiled by Labour from the English Housing Survey. These hazards include: exposed wiring or overloaded electrical sockets; dangerous or broken boilers; very cold bedrooms; leaking roofs; mould; vermin; and broken stairs.

“One million homes in this country are currently unfit, putting the health, and in some cases safety, of tenants at risk,” says Karen Buck, the Labour MP for North Westminster who drafted the fitness for human habitation bill that is going through Parliament. “Yet, at the moment, landlords have no obligation to their tenants to put or keep the property in a condition fit for habitation.”

Around half of councils in England have served none or just one enforcement notice under the Housing Act in the past year, Buck notes.

The London Borough of Newham estimates that 10,000 private rental homes within its boundaries are in category 1 – equivalent to one in four properties. Its inspectors have photographed rats in larders, baths and beds in kitchens, bedrooms in cupboards, and homes with plastic sheets in place of roofs.

John Healey MP, Labour’s Shadow Secretary of State for Housing, comments: “In practice, you have fewer rights renting a family home than you do buying a fridge-freezer.

“Too many people are forced to put up with downright dangerous housing. After the terrible fire at Grenfell Tower, it’s even more important that ministers back Labour’s plan to make all homes fit for human habitation.”

Sajid Javid, the Housing Secretary, says that he is determined “to do everything possible to protect tenants”, and pledges Government support for new legislation that requires all landlords to ensure that properties are safe and gives tenants the right to take legal action if landlords fail in their duties.

Since April, landlords have faced fines of up to £30,000 and, as an alternative to prosecution, the Government is planning to introduce banning orders for the most serious and prolific offenders, with a database of convicted rogue landlords and letting agents.

The Chief Executive of housing charity Shelter, Polly Neate, concludes: “The Grenfell tragedy exposed the catastrophic consequences of unsafe housing in the most devastating way, and how our laws fail to protect people’s right to a safe and decent home.

“Too many private and social renters are forced to live in poor and sometimes dangerous conditions, unable to tackle safety concerns or legally challenge their landlord.”