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Em Morley

OneSavings Bank Outlines Plans for PRA Portfolio Changes

Published On: August 18, 2017 at 8:15 am

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OneSavings Bank Outlines Plans for PRA Portfolio Changes

OneSavings Bank Outlines Plans for PRA Portfolio Changes

OneSavings Bank (OSB) has outlined its new lending criteria plans for portfolio landlords, to help brokers prepare early for the upcoming second phase of the Prudential Regulation Authority (PRA) portfolio changes, which will come into effect on 30th September 2017.

The specialist lending group, which includes the Kent Reliance and InterBay brands, will now require portfolio landlords with four or more mortgaged properties to provide a business plan, assets and liabilities statement, and cash flow statement in support of any mortgage application.

Details of the borrower’s wider buy-to-let portfolio will also need to be provided and assessed as part of the underwriting process.

To enable this, brokers will be able to submit borrower information via the new buy-to-let hub – a dedicated submission platform developed in partnership with eTech. The platform will offer brokers a simple dashboard that streamlines portfolio stress testing and income coverage ratio assessment, which will help to provide a rapid response to loan applications.

Portfolio landlords will be subject to an interest rate stress test of 5% on the rest of their portfolio and must meet or exceed a rental cover ratio of 125%.

The Sales Director of OSB, Adrian Moloney, comments: “Brokers have had to move quickly to update their advice following a raft of tax and regulatory changes to the buy-to-let sector, and will need to do so again once the upcoming portfolio landlord changes land in October. There’s no doubt that greater scrutiny on loan affordability will be a good thing for the sustainability of the sector, but it will also mean more of an administrative burden.

“OSB will keep things simple for brokers. We’ve always welcomed portfolio landlords and the changes here cement our position as the lender of choice for these borrowers. We’ve chosen to announce our criteria well ahead of the October deadline, to help brokers prepare for the changes in good time, so they can feel confident when preparing clients to submit a portfolio application. Together with the new buy-to-let hub, we’re doing all we can to transition brokers and their clients into the new landscape with the minimum of fuss.”

Find out how other lenders, including NatWest, Leeds Building Society, Paragon and Aldermore, are reacting to the PRA portfolio changes and keep up to date at Landlord News.

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Should rental payments be considered to boost credit score?

Published On: August 17, 2017 at 1:05 pm

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An interesting survey of nearly 3,000 buy-to-let landlords, carried out by the Residential Landlords Association, suggests that 61% would back a link between good private tenants and their credit score.

Over six in ten landlords questioned said private tenants who pay their rent on time should receive a boost of their credit score, to make it easier for them to get a foot onto the housing ladder.

Credit Rating

Routinely, credit rating agencies do not consider rental payment history when calculating credit scores. This can make it difficult for them to obtain a mortgage, even when tenants have not fallen behind on their payments.

The Residential Landlords Association believe that including rental payments in this way would make it easier for landlords to gain a better understanding of a would-be tenants’ credit and rental payment history.

Should rental payments be considered to boost credit score?

Should rental payments be considered to boost credit score?

Alan Ward, chairman of the RLA, noted: ‘With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications.’

‘Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/paying-rent-in-full-and-on-time-should-boost-a-tenants-credit-score-says-rla

 

 

Professionals and families more likely to see rent rises

Published On: August 17, 2017 at 11:42 am

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Categories: Property News

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Another report has suggested that rents are likely to increase in the third quarter of the year, as less rental properties are coming onto the market.

This is due to more landlords beginning to sell more properties as a direct result of the raft of legislation changes aimed at deterring investment, according to Belvoir.

Spiralling?

Despite the forecasted rent rises, the property franchise insists that rents across Britain are not spiralling out of control.

Belvoir’s Q2 rental index shows that private rents have risen by an average of 2.75% during the last year. This was an increase of £730pcm in Q2 2016, to £751pcm in the second quarter of this year.

When comparing the Q2 2017 average with the 2016 yearly average of £783pcm, this suggests rental price growth of just below 2% – more or less consistent with ONS statistics and other rental indexes.

Dorian Gonsalves, CEO of Belvoir, said: ‘Sensationalist media reports that rents are spiralling out of control across the country are at odds with what our offices are reporting, and that other letting agents across the country are currently experiencing. However, feedback from our franchisees confirmed that fewer properties were seeing static rents than in the previous quarter, and more offices experienced rent rises of £25 and £50 per month.’[1]

Professionals and families more likely to see rent rises

Professionals and families more likely to see rent rises

Rental Rises

The data indicates that rents range from £597pcm in the North West, £665pcm in Yorkshire, £1,048pcm in the South East and £1,446pcm in London.

In fact, the average rent recorded in Q2 2017 in London was £1,454 excluding Central London. This represented an increase of 4.5% year-on-year.

40% of Belvoir offices in the South East saw slight rises in rent during Q2 of 2017, with 40% reporting little falls and 20% remaining static. This pattern was also seen in East Anglia, Yorkshire and the East Midlands.

Looking to the third quarter, Mr Gonsalves observed: ‘Families and professionals are most likely to experience rent rises. Demand from tenants on benefits saw the biggest increase versus Q1 and therefore rents are expected to rise for this sector. Two to three bed properties remain in demand and are in short supply.

Although we are not currently seeing a huge exit of landlords from the market it is apparent that landlords are beginning to sell their properties. Most agents expect investor enquiries to remain the same, or to fall, especially for room rents.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/8/families-and-professionals-most-likely-to-experience-rent-rises

 

 

 

[2]

How has the Brexit vote affected the housing market?

Published On: August 17, 2017 at 10:11 am

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Categories: Property News

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The most recent data from eMoov.co.uk has revealed how property prices across the UK have been affected, both positively and negatively, since the result of the EU referendum.

Findings from the report reveal that house prices across districts that voted to Leave the EU have risen by 5.65% since June last year. This was compared to only 4.04% across those regions that voted Remain.

Falls

Though both sides have seen periods of house price decline, of the 13 Remain regions to see a fall, prices have slipped by an average of -4.40%. This was compared to only -1.94% in the 14 Leave districts to experience falls.

Remain regions feeling the largest Brexit blues are the City of London, Western Isles and the City of Aberdeen, with prices here falling by -20.31%, -16.00 and -9.95% respectively.

For Leave voters, the largest falls were seen in Pendle, Sunderland and Ribble Valley. Since the Brexit vote, prices here have seen falls of -6.27%, -4.21% and -3.94% respectively – much lower than the highest falls in Remain regions.

Growth

On the other hand, the UK as a whole has seen an annual increase of 4.9% in house prices since the decision to leave the European Union. 159 Leave regions have seen house price growth over the UK average.

The pick of these regions were Tendring, Copeland, Maldon, West Somerset and Rutland. Values in these regions saw rises of 13.11%, 12.86%, 12.77%, 12.62% and 12.36% respectively.

Only 44 Remain districts have seen house prices exceed the UK average annual growth figure. The highest increases were seen in Orkney Islands (27.87%), Kensington and Chelsea (12.77%), Winchester (12.30%), Exeter (10.93%) and the Cotswolds (10.93%).

How has the Brexit vote affected the housing market?

How has the Brexit vote affected the housing market?

Defiance

Russell Quirk, founder and CEO of eMoov.co.uk, observed: ‘Although there will be some homeowners on both sides of the Brexit coin feeling a little blue due to small pockets across the nation seeing property values fall, there have been many areas for both Leave and Remain majorities that have defied the prediction of a market decline to enjoy explosive growth rates.’

‘On the whole, it would seem the Leave majorities have the most reason for a Brexit birthday bash, but the bigger picture isn’t which way an individual may have voted, or even the majority outcome in that particular area. A year on from the vote itself, and although formal proceedings are still being ironed out, the UK property market has remained one of the safest investments one can make into bricks and mortar.’

Concluding, Quirk said: ‘There is no doubt that the market wobbled because of the uncertainty surrounding our departure from the EU, however, an annual increase of nearly 5% nationally is a very healthy growth rate for a market that hasn’t been firing on all cylinders. This growth should put any fears of a market crash to bed and stand us in good stead for the remainder of the year, with prices already bucking their downward monthly trend and starting to creep back up.’[1]

[1] http://www.propertyreporter.co.uk/property/where-are-the-biggest-house-price-climbers-since-the-referendum.html

 

 

The Truth About Using Airbnb to Let your Property

Published On: August 17, 2017 at 9:42 am

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Categories: Property News

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Airbnb is fast becoming the preferred method of accommodation for leisure and business travellers. For Airbnb hosts, it can be an easy way of making some extra cash, especially if your property is awaiting new tenants or is on the market. But is it really that simple?

Recently, there have been a number of stories where guests have damaged properties, people have been injured at Airbnb homes and hosts have been left with a lot of clearing up to do.

Nicole Rogers, of DAS Law, answers the most important questions for existing Airbnb hosts and those thinking of letting their properties through the platform:

If your property or belongings are damaged or stolen, will your home and contents policy cover you?

The Truth About Using Airbnb to Let your Property

The Truth About Using Airbnb to Let your Property

“It is unlikely, as the insurer will usually not have catered for paying guests when arranging the policy. The host would need to clarify with their insurer as to whether their cover would be sufficient to cover losses. Airbnb does offer a host guarantee, whereby the firm promises to reimburse hosts for damages of up to £600,000; the company adds that hosts should not consider this as a replacement for owner’s or renter’s home insurance.

“Whilst a host is not required to take out specific landlord insurance, it would be advisable to speak with a specialist broker or insurer to ensure sufficient protection.”

Could sharing your rental or leasehold property with Airbnb cost you your tenancy or home?

“Millions of Airbnb users may have unknowingly breached the terms of their leases, leaving them vulnerable to legal action or losing their tenancy.

“The vast majority of tenancy and leasehold agreements are likely to state that the property in question may only be used as a private residence. This would prevent tenants from renting out or sharing their flat or home for short periods. It should be considered by anyone letting their property out through Airbnb to check their tenancy or leasehold agreements first.

“It is not just those renting that should be wary of breaking contracts; mortgage companies may also take a dim view of homeowners offering short-term lettings of their property. It would be wise for owners to contact their mortgage company before offering their home out, as they may very well be breaking their mortgage contract. Whilst buy-to-let mortgages allow for assured short-term tenancies, short-term is often defined as six months; clearly Airbnb stays are considerably shorter than this.”

What are the tax implications for the income you receive? 

“Money received from hosting is generally regarded as income; therefore, it is likely that Income Tax will be payable, so the host may need to declare their earnings to HM Revenue and Customs (HMRC). It is possible that a host may be entitled to certain tax reliefs or allowances, so it is advisable to take tax advice regarding this.”

What precautions do you need to take to comply with health and safety legislation?

“Hosts must ensure that the premises are reasonably safe for visitors. With regards to fire safety, landlords should inform visitors of a fire evacuation route. The Regulatory Reform (Fire Safety) Order 2005 makes landlords responsible for taking steps to protect the people using your premises from the risk of fire. This means that a host should carry out a fire risk assessment, if necessary, improve the fire safety measures and keep the risks, and fire safety measures, under review.

“If a visitor has suffered an injury at a host’s premises, he/she may seek to pursue a personal injury claim, particularly if the host has breached its duty of care to the visitor, which subsequently has caused foreseeable injury.”

As an Airbnb host, do you need to have public liability insurance?

“There is no legal obligation to take out public liability insurance to host via Airbnb. However, it would be worthwhile to do so in order to protect yourself, the host, in the event of an injury claim from the visitor.”

Before deciding to let a property via Airbnb, make sure you’re aware of your legal obligations and responsibilities – don’t get caught out!

 ICA-JL-VOTE-FOR-US

 

House Price Growth in Scotland Outpaces England and Wales

Published On: August 17, 2017 at 9:14 am

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House price growth in Scotland outpaced England and Wales over the year to June, standing at an average of 4.6% – up from 2.9% in May and well above England and Wales’ 3.3%, according to the latest Scottish House Price Index from Your Move.

House Price Growth in Scotland Outpaces England and Wales

House Price Growth in Scotland Outpaces England and Wales

On a monthly basis, average house prices in Scotland were up by a respectable 0.5%, marking the fifth consecutive month of growth, against three months of falling prices in England and Wales.

The latest available figures for Scotland, however, do not take account of the post-election period, but, with transactions estimated to be up by 8%, they show that the country entered it on a strong footing.

The average house price in Scotland now stands at £175,941 – up by £7,779 over the 12 months to June.

Continued growth in Scotland is driven by the strong performance of its two biggest cities – Edinburgh and Glasgow – where prices were up by an average of 2.9% and 2.8% respectively. Both also saw solid annual growth, of 4.6% and 10.6%.

Given the difference in average prices between the two, this shows considerable strength across the market. Edinburgh’s £256,737 is second only to East Renfrewshire (£262,203, which also grew by a strong 4.6% over the month and 7.5% year-on-year). Glasgow City, meanwhile, ranks just below mid-table, with an average property value of £154,666. The city itself, but also East Renfrewshire, Renfrewshire and North Lanarkshire, as well as all neighbouring areas, saw new peak prices in the month. So, too, did the Shetland Islands.

Sales in both Glasgow and Edinburgh were supported by strong interest in affordable accommodation from first time buyers. According to the Council of Mortgage Lenders (CML), the largest number of loans taken out in the first quarter (Q1) of 2017 was by first time buyers for flats.

More widely, prices are being driven by tight supply. In the latest survey from the Royal Institution of Chartered Surveyors (RICS), surveyors saw average stock sit close to an all-time low. They also reported a small increase in enquiries in June, but a decrease in the number of new vendor instructions. This is likely to continue over the next few months during the holiday period.

Across Scotland, 15 of the 32 local authority areas saw prices rise in June, led by East Renfrewshire (if Na h-Eileanan Siar in the Outer Hebrides is not counted, as prices rose by 9.1% on very low transaction volumes).

Annually, though, strength continues right across Scotland. Only four areas haven’t seen prices rise in the last year. East Lothian and the Orkney Islands lead the growth, both up by 12.2%, but with very different price points – £225,663 and £147,897 respectively. Midlothian, up by 11.1% to £207,430, as well as Glasgow, has also seen double-digit growth.

The largest decline in prices in June on the mainland was seen in Inverclyde – down by 5.6% – and, for the year, it was West Dunbartonshire. Already among the cheapest areas in Scotland, prices there are down by 4.1% to £108,079, although the price of flats in the area has actually risen by about £7,000 over the year, although they remain under £80,000.

The Managing Director of Your Move Scotland, Christine Campbell, comments: “With strong growth in both its biggest cities, Scotland’s market is on a strong footing, with first time buyers contributing to this increase in activity. The increase in transactions is also encouraging, but we need to get more properties onto the market if that’s going to continue.”

Alan Penman, a Business Development Manager for Walker Fraser Steele – one of Scotland’s oldest firms of chartered surveyors – adds: “It’s good to see growth at both the top of the market and in more affordable areas. There seems to be a particular hotspot around Glasgow – both the city itself and its neighbouring local authorities are all growing robustly.”