Written By Em

Em

Em Morley

Bank of England base rate rise on hold

Published On: November 6, 2015 at 11:48 am

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Categories: Finance News

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People buying a home in the UK have been encouraged, with the news that mortgage rates are set to remain at historic lows for some time, despite previously widespread reports that they would rise early in 2016.

The Bank of England has indicated that the present 0.5% base rate is highly likely to remain until deep into 2016 or even 2017. Rates have been at this historically low level now for 80 consecutive months.

Concerns

There are concerns however that home purchasers could get too used to low interest rates and, as a result, this could backfire as interest rates do eventually begin to rise.

An investigation conducted by Experian seems to suggest that people who failed to secure a mortgage are failing to conduct the basic research required to get control of their finances. 13% were found to be unaware of how much money they would have left over at the end of every month, while 18% did not know what monthly payments they could afford.[1]

Additionally, the research showed that 14% did not have a large enough deposit for the property that they desired, with 12% unable to secure the size of the relevant mortgage they needed.

Worried

Further research from Ocean Finance shows that nearly three quarters of home owners with interest only mortgages are worried that they may not be able to repay their loan. Interest only deals are where borrowers pay the interest on their loan for the duration of their mortgage, then repay the capital when the mortgage term ends.

Only 31% of these interest only borrowers stated that they had a separate investment policy in place to pay the capital , such as an endowment or an ISA. 16% said that they planned to switch to a repayment mortgage before the end of their existing loan, with 31% saying that they expected to have to sell their home to settle the existing capital.[1]

Bank of England base rate rise on hold

Bank of England base rate rise on hold

Gareth Shilton, spokesperson for Ocean, said, ‘interest only has become popular in the 1990s as a way for consumers to afford homes at a time when property prices were soaring. Lenders often agreed interest only loans without confirming borrowers could repay the capital owing at the end of the mortgage. By the end of 2012, most lenders stopped offering interest only deals after tightening their lending rules.’[1]

‘It’s advisable to seek advice on whether they can overpay on their current interest only deal, switch to a repayment mortgage, or use an ISA or pension to settle the capital payment,’ he added.[1]

Interest-only popularity

In the 1990’s interest only mortgages became popular as a way for consumers to afford property when house prices were spiralling. During this period, lenders often agreed interest only loans without confirming borrowers could repay the capital owning at the conclusion of the mortgage. By the end of 2012, the majority of lenders stopped offering these types of deals after tightening lending rules.

Shilton feels that, ‘while there is a place for interest only mortgages, it is a specialised product that suits a small number of borrowers, rather than being the mass market product it become in the 1990’s. For example, if you have a large family home that you know you don’t plan to stay in once your children have left home, then interest only could make sense.’[1]

‘Interest only mortgages are now typically only being approved for borrowers who can demonstrate they have a repayment vehicle or pension pot that is forecast to repay the capital element. Usually, borrowers also need to have a significant deposit that gives them a big equity gap,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-buyers-interest-rates-2015110611174.html

 

 

Landlords Urged to Check Properties During Winter Void Periods

Published On: November 6, 2015 at 11:00 am

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Categories: Landlord News

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Landlords Urged to Check Properties During Winter Void Periods

Landlords Urged to Check Properties During Winter Void Periods

We all know that our homes can take a beating during the winter months, but if you’re a landlord, it is vital that you protect your investment(s) at this time.

The Association of Independent Inventory Clerks (AIIC) is urging landlords or their letting agents to inspect their rental properties, particularly if they will be empty over the colder months.

Sometimes, your tenants may be away for the holidays or you may be facing a void period. The AIIC explains that if no one is going to be living in the property as temperatures drop, it will not be ventilated properly, which can cause damp, mould and other related issues.

Condensation is the main cause of damp and if windows are left closed for an extended period of time, damp becomes more frequent and the chances of mould forming rises.

The AIIC adds that the longer a home remains empty and unchecked, the higher the chances of drain blockages, pipe problems and clogged gutters, typically due to leaves. You should also check pipes for cracks and leaks, as these can worsen and cause more serious problems, especially if water freezes.

The AIIC suggests that all landlords, particularly those with vacant properties, make regular and thorough checks this winter.

Recent research from specialist lender Paragon Mortgages found that the average void period has fallen to less than 2.6 weeks per year. However, the AIIC warns that even this length of time is enough for winter-related issues to arise.

The Chair of the AIIC, Pat Barber, advises: “A detailed inventory, carried out by an independent inventory clerk, also allows a landlord to identify what needs repairing between contracts. This can be vital in ensuring the long-term condition of the rental property as well as helping to get it up to scratch for new tenants.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/winter-voids-risk-damage-to-properties-warn-inventory-clerks

 

 

 

 

 

 

 

 

 

 

 

 

 

Buyers Camping Out for Chance to Buy Affordable London Flats

Published On: November 5, 2015 at 4:08 pm

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Categories: Property News

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Aspiring homebuyers have been camping out in the streets for a chance to buy affordable flats in Hounslow, London.

The properties, based inside the former UK headquarters of American Airlines, will not be ready to move into until autumn 2017.

Galliard, the developer of the site, is selling 228 new flats. Prices start at £199,000 for a 301 square foot studio suite and up to £355,000 for a one-bedroom apartment. They will be sold on a first come, first served basis.

Buyers Camping Out for Chance to Buy Affordable London Flats

Buyers Camping Out for Chance to Buy Affordable London Flats

As the flats are being built under Government rules allowing a change of use from offices to residential, Galliard was not obliged to provide any social housing in the development.

However, as more than 40% of the flats cost less than £250,000, they are more affordable than many new builds in London, and much cheaper than the average house price in Hounslow, of £383,500.

The local London press has heavily advertised the development, with prospective buyers told that owners of similar apartments in the area “see resale values soar by up to 14% growth in ten months”1.

Monika is a 38-year-old accountant from Poland. She has been queuing since 10am on Wednesday (4th November 2015). She has lived in London for 15 years, and her mother and brothers have been sitting in shifts outside the Trinity Square building.

She says: “We were thinking about buying one of the company’s flats in Hayes. I remember I came two hours after the doors opened there and 75% of the flats were already sold, so we decided to come really early for this one.

“We don’t know if there will be only one flat at £199,000 so just in case I wanted to be first in the queue. In Poland, like here, we are good at queuing, so it’s okay.

“Buying property is quite a high return and you can be sure the mortgage is paid. I’m thinking about my retirement. I believe after 20 years, I’ll have a good income so I can retire.”1

Shelinder Singh is a 25-year-old business manager from Hounslow. He has been in the queue since 5pm on Wednesday. Shelinder is an aspiring first time buyer, so if he secures a flat, it will be the first home he owns with his wife. They have been renting since they were married in 2013.

“I’m going for the cheapest one, as it’s my first time buying property, so I have to go for the one that is as cheapest as possible,” he explains.

The doors will open at 5pm on Thursday (5th November 2015). Buyers must pay a £2,000 reservation fee for a flat. After 21 days, they must pay 10% of the price followed by another 10% nine months later. The final amount is due on the day of completion.

Shelinder believes it is a great deal: “I never thought I’d be able to buy anything as cheap as that in London. You can’t find anything in this area for less than £350,000. I’m really excited about living somewhere I actually own.”1

Data released earlier this week revealed that the average UK home costs more than ten times the typical annual income of a full-time worker.

A first time buyer property costs eight times the average income.

The average house price in the UK is currently £284,000, according to the Office for National Statistics (ONS). First time buyers typically pay £215,000 for their home.

The median gross annual earnings of a full-time worker is £27,200.

1 http://www.theguardian.com/money/2015/nov/05/homebuyers-camp-out-overnight-for-chance-to-buy-affordable-flat

 

 

Fixed-rate mortgages deals at record lows

Published On: November 5, 2015 at 2:56 pm

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Categories: Finance News

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New research has revealed that average fixed rates for two, three and five year mortgage deals in Britain are at their lowest since 2012. In addition, the number of ten year fixed deals is beginning to grow.

The investigation by comparison website Money Super Market indicates that home owners looking for the best deal should think about fixing their mortgage now, while providers are slashing rates.

Record lows

Looking at average fixed term mortgage rates, the research found that many have gone down to their lowest ever levels. This is despite a much-anticipated base rate rise early next year. The average rate for a five-year fixed deal is currently 3.45%, dropping from 4.06% last year.

Short-term mortgage deals follow a similar pattern, with the average three year fixed rate coming in at 3.21%, compared to 4.8% in 2012. The average two year fixed mortgage rate is now 2.9%, when it was 4.48% in 2012.[1]

In addition, the research indicates that those looking to lock-in their mortgage rate for a more substantial amount of time will find that there are many more deals from which to choose. There are currently 41 ten year fixed rate products available, up from 35 just last month.

Fixed-rate mortgages deals at record lows

Fixed-rate mortgages deals at record lows

U-turn

Dan Plant, consumer expert at MoneySuperMarket, said, ‘mortgage lenders are doing a U-turn, decreasing their rates again after hiking them over the last couple of months.’ He suggests that, ‘even though the Bank of England base rate hasn’t risen yet, it’s a still a case of when rather than if, so any homeowners looking for a cheaper deal should take advantage of the current low rates.’[1]

‘Many lenders allow mortgage holders to reserve rates available now for up to six months for a small fee, so even those who still have some time left on their current deal can benefit. However, you should never rush into decisions to do with mortgages. Before taking out a mortgage, it’s vital to work out the total cost over the term of the deal, taking both rates and fees into account. Expensive fees can wipe out the potential benefit of a lower rate so do the sums first to ensure you really are getting a great deal. The good news is that we’ve seen fees decrease over the last four years, especially for five year fixed deals, meaning it’s a cheap time overall to be looking around,’ Plant added.[1]

[1] http://www.propertywire.com/news/europe/uk-mortgage-deals-low-2015110511169.html

 

 

Landlord Fined £30,000 for Cramming 12 Tenants into Five-Person Home

Published On: November 5, 2015 at 1:59 pm

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Categories: Landlord News

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A landlord in Watford who earned around £27,000 a year in rent has been fined £30,000 after pleading guilty to cramming 12 tenants into a five-person flat. Some of the renters slept in storerooms.

Landlord Fined £30,000 for Cramming 12 Tenants into Five-Person Home

Landlord Fined £30,000 for Cramming 12 Tenants into Five-Person Home

Zuo Jun He pleaded guilty to 11 offences against the Housing Act when he appeared at Watford Magistrates’ Court on Monday (2nd November 2015), including two of allowing more people to live in the property than were covered by his House in Multiple Occupation (HMO) license.

Officers from Watford Borough Council found 12 people living in the flat, situated above a Chinese restaurant. Some of the tenants were sleeping in rooms that were listed as storerooms on the HMO license.

The council reported that because there was no communal living space, tenants were in their rooms all of the time, despite there being no space to walk around. A family, including a seven-year-old child, shared one room.

The landlord was fined a total of £30,000 plus £5,326.54 in costs to the council, court costs of £150 and victim surcharge of £120. However, the maximum fines for the separate offences could have totalled £70,000.

The tenants only had one small kitchen, which was in a filthy state when inspected by the council, and the property’s fire exit was obstructed.

Zuo Jun He stated that he accepted £515 per week in rent for the property, equivalent to £26,780 a year.

The overcrowding was discovered when a tenant complained.

Dorothy Thornhill, the Mayor of Watford, comments: “Most landlords are excellent and we’ll always do our best to work with them, not against them. Those few landlords who flout the law and take advantage of vulnerable tenants out of greed will be targeted and we will take action against them.

“To help tackle this issue, I hope that magistrates will continue to make the penalties reflective of the money rogue landlords make out of abusing their position. As housing demand continues to increase, we’re going to see more of this across the UK – we need to act swiftly and decisively.”1

Recent data from the Environmental Health News reveals that between 2006-14, just 2,006 rogue landlords were convicted, resulting in total fines of £3m. However, many of those convicted were still operating as landlords.

The council ruled that Zuo Jun He can still work as a landlord, but will not receive a future HMO license. He has since evicted all of the tenants.

1 http://www.theguardian.com/society/2015/nov/04/watford-landlord-fined-12-tenants-five-person-flat

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual house price growth rises in October

Published On: November 5, 2015 at 12:28 pm

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Categories: Property News

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Annual house price growth rose during October, according to new research conducted by the Halifax.

The UK’s largest mortgage lender cited, ‘improving economic conditions,’ for the rise.

Increases

Data from the report shows that prices rose at an annual pace of 9.7% last month, up from the 8.6% recorded in September. In October, house prices increased by 1.1%, following a decline of 0.9% during the previous month.

This increase lifted the average price of a flat or house across the country up to £205,240, which is a new record high.

‘Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015,’ noted Martin Ellis, Halifax housing economist. [1]

‘Strengthening demand is filtering through into higher sales levels, although the ongoing shortage of supply is acting as a significant constraint on activity,’ he added. In addition, Ellis believes that demand is likely to continue to outstrip supply over the next few months, ‘maintaining upward pressure on house prices,’ as a result.[1]

Annual house price growth rises in October

Annual house price growth rises in October

Shortage

This chronic lack of supply has presented real problems for estate agent group Countrywide, who announced last night that its full-year profits were expected to drop as a result of fewer properties coming onto the market.

The company noted that, ‘the anticipated post-election recovery in residential transactions failed to materialise in any significant way.’[1]

Just last week, rival mortgage lender Nationwide said that house prices increased by 3.9% in October, in comparison to the same period twelve months ago.

In addition, property values were up by 0.6% compared to September

[1] http://www.bbc.co.uk/news/business-34730542