Written By Em

Em

Em Morley

Councils tell tenants to stay put until legally evicted

Published On: January 11, 2016 at 4:05 pm

Author:

Categories: Landlord News

Tags: ,,,,,

An extraordinary move from councils across Britain is seeing many calling on tenants to stay put in buy-to-let property when asked to leave by their landlord.

This in turn has left many law-abiding landlords hundreds of pounds out of pocket after paying legal costs.

Remarkable

Councils are said to be using this tactic as the latest attempt to deal with Britain’s housing shortage.

Remarkably, some owners returning to their properties after living abroad are being faced with tenants refusing to move until they are legally evicted.

The eviction process takes around four months on average and is extremely costly for landlords. Experts believe the ‘sit-in’ problem is more acutely found in London and Birmingham, where demand for rental homes far outweighs supply.

David Lawrenson of LettingFocus.com, described the councils’ plan as, ‘stupid,’ before adding that, ‘it doesn’t encourage landlords to take on people who are financially vulnerable.’[1]

Worsening

Landlords having to deal with tenants staying put in their homes has gradually got worse as Britain’s house shortage continues to escalate. According to Rightmove, almost five people compete for every property available to let across the country. This figure rises to one in nine for rental property in the capital, as Rightmove says demand is at an, ‘all time high.’[1]

A rise in population and immigration has not been matched by the country’s housing stock. As a result, rents have spiralled.

For many, particularly in the South, suitable properties are unaffordable and would-be buyers are turning to local authorities for assistance. Those that have approached councils are being told that they cannot get help unless they are homeless and are being advised to stay put in rental accommodation until they are legally forced out.

Waiting game

Alan Ward, Chairman of the Residential Landlords Association, said it is a standard procedure for tenants to be told to stay put, providing there was no other homes in the area that they could afford. Ward said that tenants needed to wait until they were evicted before looking for a council property.

Councils tell tenants to stay put until legally evicted

Councils tell tenants to stay put until legally evicted

Mr Ward said that the problem is, ‘becoming acute in some areas, not necessarily because there are fewer homes due to landlords exiting the market, but because there are more people seeking them. It partly comes back to immigration, as there are lots of people coming to this country and they typically want to rent properties.’[1]

‘The council only gets involved when a tenant is looking for social housing. Tenants are told they cannot be rehoused until the bailiffs are at the door,’ he added.[1]

Section 21

Landlords faced with tenants who will not vacate their property need to serve a Section 21 notice. Should the fixed term in the contract have already ended, this gives the tenant two months to find a new property.

If the tenant is unable to find a new home after two months, the landlord can apply for an eviction in court. Following this, it can take between six and eight weeks for the judge to grant a possession order.

[1] http://www.telegraph.co.uk/news/uknews/12092051/Councils-responding-to-Britains-housing-crisis-by-telling-tenants-to-stay-put-in-buy-to-let-properties-when-landlords-ask-them-to-leave.html

 

How will the property market change in 2016?

Published On: January 11, 2016 at 1:59 pm

Author:

Categories: Property News

Tags: ,,,,

2016 looks to be a key year for the property market. Certainly, there is much more to consider than whether property prices will go up or down!

It looks increasingly likely that the Bank of England will follow the decision of the US Federal Reserve and raise interest rates in the coming months.

So just who and what will be most affected in the market over the coming year?

Landlords

Unfortunately, it seems as though buy-to-let landlords will see a particularly difficult 2016.

Stamp Duty

One alteration certain to have an impact on the market is the stamp duty hike coming into force on April 1st. Buy-to-let landlords and property purchasers buying a home that is not their main residence will face an extra cost of 3% in tax.

It is suggested that these changes will deter some potential buyers. With sales and mortgages being revived over recent years, the property market is set to receive some setbacks in 2016.

Tax Breaks

On top of stamp duty rises, a reduction in tax break privileges has been slated for, after an announcement in the Chancellor’s summer budget

What’s more, the Bank of England has indicated that it wants power to limit lending to buy-to-let borrowers and it appears likely that the Chancellor will side with this view.

The Government seemingly puts the blame for lack of affordable housing at the feet of private landlordism, with a booming private rental sector seeing potential home-owners out in the cold.

Buy-to-let

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS) noted that, ‘the Government is very motivated to reverse the trend in owner-occupation-this is now a very important part of the Government’s housing strategy.’[1]

‘Buy-to-let landlords have had a very good run-holding property has been a very lucrative investment, so if the Government has to squeeze the buy-to-let landlord it will take that in it’s stride,’ Rubinsohn added.[1]

Property commentator Henry Pryor called the moves, ‘an extraordinary about-turn for landlords.’ He went on to say, ‘because rents are unlikely to rise to compensate for the increase in stamp duty, capital values are likely to fall-which is the Government’s intention.’[1]

How will the property market change in 2016?

How will the property market change in 2016?

Right to Rent

Just next month on February 1st, the controversial Right to Rent scheme will be rolled out in full across the country. Landlords will be responsible for checking the immigration status of potential tenants and could be fined up to £3,000 for non-compliance.

Pryor suggests, ‘many landlords are finding this is a rather frightening prospect and are talking of giving up as a result.’[1]

The Council of Mortgage Lenders forecasts that the number of new loans made to landlords will dip substantially, from 116,000 in 2015 to 90,000 in 2017.

Mortgages

It is now nearly seven years since the Bank of England cut interest rates to a record low of 0.5%. From then, economists have predicted that rates would begin to rise again, but have consistently been wrong.

However, it looks as though 2016 could well be the year where rates do eventually rise. The majority of independent economists believe that the first rises since July 2007 will occur in this year and will come in two increments of 0.25% each.

Ed Stansfield, forecaster at Capital Economics, thinks, ‘the economy is probably a little bit healthier than the collective wisdom of the Bank’s Monetary Policy Committee thinks. We think that one of the things that will convince the Bank to act is continued signs that incomes are recovering.’[1]

Thankfully, a growth in incomes should soften the blow of any interest rate hike.

Troubled Times

For many years, the low base rate has led to very low mortgage rates, making large mortgage rates seem affordable.

Schemes such as Help-To-Buy have buoyed house prices and sales, meaning many thousands of potential homeowners have received money to buy a property when previously they would not have been able to do so.

A steady growth noted in the economy, coupled with rising employment and income, means that prices and sales should remain at least even.

However, Ray Boulger, of mortgage brokers John Charcol, suggests that there could be some turbulence in the early months of this year. He believes that many people will rush to purchase buy-to-let property before the higher rates of stamp duty take effect.

‘Those people who want buy-to-let properties are clearly going to be incentivised to complete before 31 March. Till then I think we will see some quite strong growth in prices, then I expect to see prices falling for the next few months as that element of demand is taken out of the market,’ Boulger added.[1]

[1] http://www.bbc.co.uk/news/business-35135639

 

David Cameron Pledges £140m to Regenerate Run-Down Estates

Published On: January 11, 2016 at 1:38 pm

Author:

Categories: Property News

Tags: ,,

In another housing policy, David Cameron has announced plans to regenerate 100 run-down estates in a £140m scheme.

The Prime Minister explains that some housing estates will be transformed, while others will be demolished and replaced. He describes the estates as “brutal high-rise towers and dark alleyways” and “a gift to criminals”.

The pledge includes a right to return for all residents living in the estates. However, opponents question whether the rents of these homes will be at the same low level they are currently when they are replaced.

The Government hopes the plans will encourage third parties, such as pension funds, to help with housing regeneration.

John Healey, Labour’s Shadow Cabinet Minister for Housing, is not convinced by the plans.

David Cameron Pledges £140m to Regenerate Run-Down Estates

David Cameron Pledges £140m to Regenerate Run-Down Estates

He remarks: “Another week, another housing announcement. If press statements build new homes, the Government would have the housing crisis sorted.

“People simply won’t see this small-scale scheme stretched over 100 estates making much difference to the housing problems in their area.

“Any extra to help councils build new homes is welcome, but Conservative ministers have halved housing investment since 2010 and are doing too little to deal with the country’s housing pressures.”1 

The announcement is due today, but Mr. Cameron revealed the plans himself in a Sunday Times article. He believes that the policy will tackle issues that have “held people back”.

He states: “Decades of neglect have led to gangs and anti-social behaviour. And poverty has become entrenched, because those who could afford to move have understandably done so.

“The mission here is nothing short of social turnaround, and with massive regeneration, tenants protected, and land unlocked for new housing all over Britain, I believe we can tear down anything that stands in our way.”2

Mr. Cameron then spoke on the BBC’s Andrew Marr Show, defending the new policy: “I think sink housing estates, many built after the war, where people can feel trapped in poverty unable to get on and build a good life for themselves.

“I think it’s time, with Government money, but with massive private sector and perhaps pension sector help, to demolish the worst of these and actually rebuild houses that people feel they can have a real future in.

“We should have a big shift towards more affordable housing to buy. Of course you always need some affordable housing for rent.”2

The Secretary of State for Communities and Local Government, Greg Clark, adds: “You’ve got estates that are showing their age [and were] perhaps badly designed when they were first built sometimes in the 1960s or 1970s.

“We’ve learnt a lot since then. We actually want to work with local communities to build more homes and a better future for existing tenants there.”2

The Independent reports: “Given this is to be split across 100 estates, that should allow for a few repainted front doors and giant wheelie bins then.

“Anyone who grew up on an estate knows the biggest problem is the inexorably suffocating economic and social nihilism. If there’s nowhere and nothing better to aspire to, then frustration turns to resentment and eventually, anger.

“100 unnamed estates? A not clearly earmarked £140m – when even ten times as much is not enough? Vague promises of private sector and pension sector funding? Halving the amount invested in housing since 2010? You really can’t fool all the people all the time, whether they live on council estates or not.”3 

The British Property Federation (BPF) has welcomed the plans, praising the pledge for “binding guarantees” to be enforced for tenants and homeowners, ensuring their right to a home is protected.

Director of Policy at the BPF, Ian Fletcher, comments: “There are some very old council estates that are in need of regeneration, but that process must treat existing residents fairly.

“The Government is therefore right to put some sorts of guarantees at the forefront of its policy and encourage a partnership approach. There are investors in our membership, pension funds and the like, who will be very interested in how they can contribute to those partnerships.

“Communities need not only homes, but jobs, schools and green spaces and other leisure opportunities to create places people want to live in. If the Government gets this right, it could be some of the best use of £140m it has ever spent.”4 

1 http://news.sky.com/story/1619875/brutal-estates-to-get-140m-regeneration

2 https://www.gov.uk/government/speeches/estate-regeneration-article-by-david-cameron

3 http://www.independent.co.uk/voices/camerons-ideas-for-council-estates-are-as-ill-formed-as-they-are-patronising-a6805081.html

4 http://24dash.com/news/housing/2016-01-11-PM-pledges-140m-to-transform-sink-housing-estates

First-time buyer numbers fall slightly in 2015

Published On: January 11, 2016 at 10:39 am

Author:

Categories: Property News

Tags: ,,,

Interesting new data from the Halifax has revealed that first-time buyer numbers decreased marginally in 2015, but passed the 300,000 mark for the second consecutive year.

The total of 310,000 represents a slight fall from the 311,700 recorded in 2014 and is the first dip in first-time buyer numbers since 2011. Despite this, numbers are still up by 60% from the 193,700 recorded four years ago.

Price is right

Numbers of first-time buyers may have marginally fallen, but the average price paid for a property by this particular group increased by 10% during the last year. The average price paid by first-time buyers increased from £172,563 to £190,180.

In terms of deposit, the average amount put down by would-be purchasers was £32,927. This was 13% greater than the £29,094 recorded in 2014 and 88% more than the average deposit in 2007.

25 year mortgages have been the norm for a considerable amount of time. However, increasing numbers of first-time buyers are taking out mortgages where payments are spread out over a longer period. In 2007, the proportion of first-time buyers looking for a 35 year mortgage was 16%. In 2015, this had risen to 26%. In the same period, the share of mortgages with terms between 20-25 years fell from 48% to 30%.

First-time buyer numbers fall slightly in 2015

First-time buyer numbers fall slightly in 2015

Favourable

‘For the second year in succession, the number of buyers getting on the first rung of the housing ladder has reached 310,000,’ noted Craig McKinlay, Mortgages Director at the Halifax. ‘Although the average price of the typical first-time buyer home has grown by 10% in the past year, the number of buyers taking that first step onto housing ladder has been supported by favourable economic conditions; namely, record low mortgage rates, rising employment and real pay growth.’[1]

Of all house purchases made with a mortgage during the last year, 46% were made by first-time buyers. In addition, first-time buyers were given a shot in the arm by Stamp Duty changes announced in December 2014.

This change benefited first-time buyers in London the most, with purchasers buying property at the average price of £367,990 paying £8,399 in stamp duty, as opposed to £11,039 before the alterations.

‘Whilst affordability has improved since 2007, in many parts of the country the ratio of the average house price to earnings is still significantly above the long-term average of 4.0. This is a concern as it could prevent many potential buyers from entering the market.,’ McKinlay concluded.[1]

[1] http://www.propertyreporter.co.uk/property/ftb-numbers-pass-300000-mark-for-second-year.html

 

Homebuyers and Tenants Warned of Deposit Scam

Published On: January 11, 2016 at 10:36 am

Author:

Categories: Property News

Tags: ,,,,

Online fraudsters are stealing millions of pounds from property buyers and vendors in a conveyancing scam.

The crimes are reported to be growing and are worth an average of more than £112,000.

Homebuyers and Tenants Warned of Deposit Scam

Homebuyers and Tenants Warned of Deposit Scam

Estate agent Chestertons is so concerned by the scams that it has compiled a list of tips for sellers and buyers to avoid the fraud, which cons those moving home out of their deposits.

Chestertons warns that similar scams could also hit private tenants waiting to sign tenancy agreements and pay deposits and rent.

Police believe that foreign crime syndicates could be responsible for the scams, by which criminals hack into the email correspondence between vendors, buyers, solicitors and estate agents.

The fraudsters then send an authentic-looking email, often on the day of completion, telling the buyer or the buyer’s solicitor that the bank account details of the conveyancer have changed. The criminals then empty the bank account with the new details.

Action Fraud reports that there were 91 of these cases up until October last year – the last month for which data is available.

In September and October alone, 16 cases were reported.

The Deputy Head of Action Fraud, Steve Proffitt, comments: “We are getting more and more instances of this. The outcome for the fraudster is tremendous. They can earn £1m on the sale of a house in the South East.”1 

Chestertons advises home movers – including tenants – to only give out sensitive information, such as bank details, over the phone or in branch, not over email.

It says that house hunters using property portals to find their next home should be especially wary of registering to receive details.

The firm warns that cyber criminals are very aware of the timescales involved in buying homes and know when deposits, including tenancy deposits, are likely to be transferred.

It insists: “You should be careful about how much information you share, especially if there is no pre-existing relationship with the firm that you’re contacting.

“Remember to give just enough details for agents, surveyors or lenders to get in touch with you as required and understand your basic requirements. Do not give any bank details.”

Read the full guide here: http://www.chestertons.com/research-and-insight/insights/chestertons-guide-to-avoiding-cybercrime-during-a-property-transaction/

1 http://www.propertyindustryeye.com/property-frauds-escalating-as-buyers-and-tenants-are-robbed/

 

Renting in London – Only a Few Places are Still Affordable

Published On: January 10, 2016 at 2:50 pm

Author:

Categories: Finance News

Tags: ,,,,

Recent research has found that rent prices in London are the most expensive of any city in the world, at an average of £2,083 per month, after rising by 4% last year alone.

And while renting in the capital may seem impossible for some people, the huge gap between prices across London means that there is still hope for many prospective tenants.

Property investment firm CBRE found that Bexley is the most affordable London borough in which to rent, after examining 32 cities across the world. The average rental property in Bexley now costs around £1,007 per month.

Bexley, Havering, and Barking and Dagenham – all in the southeast of the capital – were named as the most affordable boroughs in London, with the average rent across the three areas more than £2,000 a month cheaper than in the most expensive borough.

Most affordable London boroughs for renters

Position Borough

Rent per month
1 Bexley £1,007
2 Havering £1,083
3 Barking and Dagenham £1,162
4 Sutton £1,166
5 Bromley £1,271
6 Enfield £1,285
7 Redbridge £1,293
8 Croydon £1,309
9 Waltham Forest £1,309
10 Hillingdon £1,311

The three most expensive boroughs for tenants are Kensington and Chelsea, the City of Westminster and the City of London, all with average rents of around £3,000.

Most expensive London boroughs for renters

Position Borough

Rent per month
1 Kensington and Chelsea £3,405
2 City of Westminster £3,062
3 City of London £2,945
4 Camden £2,615
5 Islington £2,282
6 Hammersmith & Fulham £2,168
7 Tower Hamlets £2,163
8 Lambeth £2,093
9 Hackney £2,088
10 Wandsworth £1,889

Although rent prices in Bexley are the cheapest in the capital, the borough has also experienced the fastest price growth over the past 12 months – rent there has risen by 10% in the last year, says CBRE.

Renting in London - Only a Few Places are Still Affordable

Renting in London – Only a Few Places are Still Affordable

There is a huge demand for rental property in Bexley due to good transport links, parks and low prices. Online letting agent Rentify found that last year, it was the second most searched for borough in London.

Head of Residential Research at CBRE, Jennet Siebrits, says Bexley – which was also the cheapest borough in 2015 – has remained affordable because of its location.

She explains: “It is a great place to live, but in outer London and therefore priced accordingly, it’s typically a family location, so hasn’t been a huge rental market. But its cheaper rents have attracted renters, hence the growth.”

Excluding London, rents around the UK sit at an average of £749 per month, after increasing by 3.5% over the year, according to the latest quarterly rental index from Homelet.

The firm reveals that the gap between rents in the capital and the rest of the UK is now the highest ever recorded.

Siebrits says the strength of the rental market reflects a sharp rise in the amount of tenants in London over the last ten years.

She says: “Renting is becoming ever more popular, with a significant increase in renters. This partly reflects affordability constraints – even before the financial crisis we were seeing an uptick, but it has magnified since the crisis – and subsequent credit constraints.”

She adds that the rise in immigration has led to more demand for rental accommodation: “London is arguably the global financial centre and attracts the top international conglomerate companies, which have workers who need temporary rental accommodation.

“At the other end, we attract Europeans who come here for employment opportunities, who also need accommodation and are not able to access the owner-occupation market.”1

1 http://www.telegraph.co.uk/finance/property/12058428/Where-in-London-can-you-afford-to-rent-Theres-only-a-few-places-left.html