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Affordable Housing Firm’s CEO on What the Budget Should Include

Published On: July 7, 2015 at 4:06 pm

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Brian Johnson is the CEO of one of the UK’s leading affordable housing and care providers.

He speaks of what the July Budget, scheduled for Wednesday 8th July, should include.

“The upcoming Budget is being promoted as a stability Budget, with a continued focus on reducing the deficit,” he says.

Affordable Housing Firm's CEO on What the Budget Should Include

Affordable Housing Firm’s CEO on What the Budget Should Include

He explains what the affordable housing sector needs: “For our sector, if we’re to continue to play a major part in tackling the housing shortage, stability and certainty are key. I have written before about how we are much more affected by the cyclical nature of the market than in the past and the constraints that this can create.”

Johnson continues: “For example, if market sales slow down there will be implications for our building pipeline. Similarly, further welfare reforms – particularly the benefit cap – will impact on the number or type of affordable homes that we’re able to build.

“Even in a stable market some associations, just like commercial house builders, will begin to hit gearing constraints and others could begin to run out of security to borrow against, causing building numbers to fall off a cliff.”

Johnson says what the Budget must do: “Many of these risks can be managed but a level of certainty from this Budget and into the future will allow us to deliver more for more people. That’s why sufficient and sustainable should be the watch-words for housing, both in this Budget and into the comprehensive spending review.”

He is clear about what the industry needs: “That means sufficient funding to maintain our building pipeline and mitigate risks from big policy changes, and sustainable funding for the longer term so we can be confident when we’re writing out business plans.”

However, he says that this is not just about delivering more homes: “It is also about the real social value we deliver on the ground.”

Johnson is planning ahead: “In September we’ll be publishing a report on what more we can do as an organisation and as a sector to enable more people in social housing or receiving social care to achieve more of their own ambitions – whatever that may mean for individuals.

“In the meantime, if it is to deliver real stability in the housing sector, this Budget needs to deliver certainty as well as savings. We know the headlines that could affect our sector in the coming years: welfare reforms, changes to the Right to Buy and perhaps even moves towards greater regulatory freedoms.”

Johnson concludes: “Ultimately the devil will be in the detail and the sooner we can respond to those details and adjust our business models, the better. This is true for us but more importantly for the people we serve.”1 

1 http://www.insidehousing.co.uk/debate/expert-opinion/firm-footing/7010627.article?adfesuccess=1

Tax changes could lead to homes being re-valued

Published On: July 7, 2015 at 3:42 pm

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Tomorrow marks the first Budget since the Conservative’s election victory in May. Amongst the proposed changes are alterations to the inheritance tax, which could lead to a number of families looking to get their homes re-valued.

The mooted changes would see inheritance tax linked directly to the value of a home for the first time. Chancellor Osborne is expected to confirm the move which would see the effective inheritance tax threshold for married and civil partners to £1m. According to analysis of Land Registry data by NFU Mutual, a number of areas have been identified where the value of homes exceeds the suggested £1m price cap.

Hotspots

Research from NFU Mutual indicates that families in Gloucestershire, Dorset and Cheshire might be extremely interested in having their property re-valued, should the proposals come into force.

‘If you don’t know how much your home is worth, then there’s real danger that you and your family could lose out,’ commented Nicki Whittaker, high-value home specialist at NFU Mutual. ‘Around three in every ten homes are undervalued by their owners, leaving families at risk of underinsurance and an unexpected tax bill, she added.’[1]

Approximately, 80% of million pound properties sold in England and Wales over the last 15 years are in London and the South East. However, there are pockets of high-value homes in the rest of the country, including regions of the South West.

Tax changes could lead to homes being re-valued

Tax changes could lead to homes being re-valued

Worth

Whittaker continued by saying that she expects there to be a, ‘rush to re-value these properties as parents and grandparents look to hand down as much as they can to their families. But many of these bespoke and listed properties need more thorough assessment to establish their true worth.’ She added that, ‘figures from our valuation partners show many expensive country homes are dramatically undervalued because owners are often unaware that the cost of rebuilding listed and unique properties is so much greater.’[1]

‘It’s clear from these results that thousands more people need to take action if they want to make sure their biggest financial asset remains in the family. A valuation and some simple tax planning would help to make sure people are fully protecting what is rightfully theirs,’ Whittaker concluded.[1]

[1] http://www.propertyreporter.co.uk/property/could-tomorrows-budget-cause-a-rush-to-value-1m-homes.html

 

 

The House that Costs £1,000 a Day in Rent

Published On: July 7, 2015 at 3:39 pm

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A mansion on one of London’s most exclusive roads has been put on the rental market for an enormous £1,000 per day.

The 6,300 square foot house in St John’s Wood, North West London, has six bedrooms. The main reception is larger than the average family home.

Described as an “ambassadorial”1 property, the Victorian home has fine marble and parquet flooring over its four floors.

The master bedroom suite looks out over the back garden, and has its own drawing room, two dressing rooms and an en-suite bathroom.

The property has four bathrooms and four reception rooms, as well as a large kitchen and garden.

Situated on Avenue Road, the property is partly furnished with antique furniture, opulent chandeliers and paintings.

Rescorp Residential has put it on the rental market for £6,950 per week, equating to £361,000 a year.

1 http://www.dailymail.co.uk/news/article-3100935/The-house-earns-1-000-DAY-Six-bedroomed-home-one-exclusive-roads-London-available-rent-7-000pw.html

Lenders Relaunch Interest-Only Mortgages

Published On: July 7, 2015 at 2:59 pm

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Three years ago, mortgage lenders abolished loans for borrowers wanting to avoid paying back the capital on their loans each month. Now, lenders are relaunching interest-only deals.

These deals allow people to keep their mortgage repayments low, as just the interest and not the capital is repaid each month. They were popular in the early 2000s, when many people struggled with affordability.

By 2007, a third of new mortgages were interest-only, according to data from lenders. Most borrowers had no repayment plan for the outstanding capital, but relied on an increase in their property’s value to repay the loan. By the end of 2012, after mortgage criteria were tightened, most lenders had either abolished interest-only lending, or had greatly restricted this type of loan.

Now, Barclays is the latest lender to loosen the criteria on its interest-only deals for those who wish to use the capital from their home sale to repay the loan. This is similar to the relaxing of rules by Leeds Building Society and Santander.

Barclays will lend on an interest-only basis up to a maximum loan-to-value (LTV) of 75%, when the sale of a property is being used to repay the loan. Previously, this was restricted to 50% LTV. However, the extra 25% in the new deal must be repaid as capital and interest. Barclays will only consider applicants with a sole income of £75,000 or a joint income of £100,000 or over.

Lenders Relaunch Interest-Only Mortgages

Lenders Relaunch Interest-Only Mortgages

Andrew Montlake, of mortgage broker Coreco, says: “We have been saying for some time that lenders should do interest-only for the right borrower. Interest-only itself has never been bad, but it has been used badly before.”1 

Leeds and Santander will also lend interest-only up to 75% LTV, on the same 25% capital and interest basis. Neither lender has a minimum income requirement, but Santander says that applicants must have at least £150,000 equity in their home.

Since increasing the LTV on its interest-only mortgages, Leeds says around 80% of the borrowers taking out these loans are remortgaging.

Spokesperson Martin Richardson, comments: “This is broadly in line with what we would have anticipated. It is a useful middle way for a borrower who has an interest-only mortgage, but hasn’t made progress in paying down the capital, as they can start to reduce this without the payment shock of switching to a full repayment mortgage.”1

It is also believed that the Royal Bank of Scotland/NatWest is planning to relaunch interest-only mortgages in the next few months after leaving this market in 2012. It is likely to have similar criteria as its rivals.

Other lenders, especially smaller building societies, may consider offering interest-only deals on an individual basis, while others, such as the Yorkshire Building Society, have left the interest-only lending market altogether.

Chief Executive of mortgage broker SPF Private Clients, Mark Harris, says that the recent changes in interest-only lending are “very encouraging.”

He continues: “Banks clamped down on interest-only borrowing as a knee-jerk reaction to lax lending practises, but we are now starting to see some relaxing of overly tight criteria. Interest-only does have a place for the right borrower with a considered repayment strategy in place.”

He uses those who are self-employed or have irregular monthly incomes as examples.

“Interest-only can also suit those who get deferred bonuses, where the income is paid to them at a future date or with large pension pots that allow sufficient tax-free cash to be taken to repay the mortgage,” he explains. “It can also be helpful for those with a joint mortgage where one of the contributors is on a career break – for maternity leave, for example.” 

The recent additions could be more down the line of what the Financial Conduct Authority (FCA) considered when initially tightening lending criteria.

Despite once describing interest-only mortgages as a “ticking timebomb”1, the FCA has also said that lenders may have gone too far with their clampdown.

When he first became head of the newly formed FCA in 2013, Martin Wheatley said: “There are two sides to the risk equation – consumer detriment arising from the wrong products ending up in the wrong hands, and the detriment to society of people not being able to get access to the right products.”1

Harris says that the key to successful interest-only loans is for borrowers to have a strong plan in place to pay off the capital, and lenders must approve this.

He concludes: “If you are planning to downsize, for example, there must be enough equity in the property to enable you to do so. Those hoping to win the lottery or inherit a lump sum from an elderly relative will find that this strategy won’t be acceptable to any lender.”1 

1 http://www.theguardian.com/money/2015/jul/06/lenders-revive-interest-only-mortgage-deals

Property Prices Around Olympic Park Rise 84%

Published On: July 7, 2015 at 2:31 pm

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This year marks the third anniversary of the 2012 Olympic Games in London. New research from Lloyds Bank has found that property prices around the Olympic Park have continuously increased.

In the 14 postal districts surrounding the Olympic Park, the average house price has risen from £206,191 in July 2005 – when the Games were awarded to London – to £378,884 in March 2015. This

Property Prices Around Olympic Park Rise 84%

Property Prices Around Olympic Park Rise 84%

is an increase of 84%, or £172,693.

This growth is more than twice that in England and Wales as a whole, where prices rose by an average of 41%, from £185,672 in July 2005 to £261,962 in March 2015.

Since the Games finished in September 2012, the average price in the 14 East London areas has surpassed London as a whole, with an increase of 33% compared to 25%. In the same period, property values rose by 12% in England and Wales generally.

In the last year, house prices near the Olympic Park grew by 13%, from £334,123 in March 2014 to £378,884 in March this year.

Stratford, where the Park is located, recorded the highest price growth, of 22%.

Mortgages Director at Lloyds Bank, Andy Hulme, says: “When London won the bid to host the 2012 Olympic Games, many within the organising committee saw this as a perfect opportunity to regenerate the East London area.

“A decade on, the impact of major investment is there for all to see; improved rail and tube networks, a high class retail environment and the gradual conversion of the Olympic sites into residential homes.”1 

Since July 2005, five of the 14 areas around the Park have experienced growth of over £200,000. Dalston saw the largest increase of £285,800, followed by Shoreditch at £261,054, Clapton at £244,591, Bethnal Green at £233,076 and Homerton at £220,761.

11 of these areas now have an average house price of more than £300,000, compared with none in 2005. Dalston is the most expensive area, with an average price of £518,035. This is more than double that in East Ham, at £241,017, which is the least expensive.

1 http://www.whathouse.com/news/article/559a53a14031b916349d787f/House+prices+around+London%2527s+Olympic+Park+up+84%2525+since+2005

Landlord confronts rogue agent who owes £20,000

Published On: July 7, 2015 at 2:27 pm

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This week’s episode of ‘Nightmare Tenants, Slum Landlords’ will show how just one rogue agent can give other, conscientious ones a bad reputation.

Margaret Wilson is to come face to face with the unscrupulous agent that owes her £20,000. Mrs Wilson owns a couple of rental properties in Oxfordshire and two years ago, she decided to put them under the control of agent Carl Afilaka of Christopher Stanley Lettings Ltd.

Non-payments

Initially, everything was in order, with Mrs Wilson receiving monthly payments from the agent. However, after the first year, despite tenants paying rent to Mr Afilaka, he in turn stopped paying Mrs Wilson. As a result, she is now owed around £20,000.

Investigations into Christopher Stanley Lettings Ltd has found that Mrs Wilson was not the first person to be scammed by Afilaka. Other landlords have complained of their deposits not being securely registered or not returned, with others citing violent behavior.

Mrs Wilson contacted Trading Standards and the police, both with no successful outcome. After a few fruitless months trying to contact Mr Afilaka, she eventually got in touch with Landlord Action’s debt recovery department. With the help of founder Paul Shamplina, Mrs Wilson finally gets to confront the rogue landlord face to face.

Landlord confronts rogue agent who owes £20,000

Landlord confronts rogue agent who owes £20,000

Infuriating

‘For a number of years, our debt recovery department has been taking legal action for landlords against rogue agents that withhold rent owed to landlords for their own business and cash flow purposes,’ said Mr Shamplina. ‘It infuriates me that any agent is able to get away with this whilst causing so much distress to a landlord. It can often discourage them from using a good reputable letting agent in the future.’[1]

‘All landlords should do their research with regards to finding a good agent, making sure they belong to an association such ashttp://www.arla.co.uk/ or NALS, that they are registered with a mandatory redress scheme and, most importantly, that they have client money protection insurance in place.  Landlords can also look for the SAFEagent logo which will give them a peace of mind. This way, if ever the instructed agent was to go out of business the rent and their tenant’s deposit would be insured.’[1]

See Mrs Wilson give Mr Afilaka his comeuppance tomorrow at 9pm on Channel 5.

[1] http://www.propertyreporter.co.uk/landlords/landlord-faces-agent-who-owes-her-20000.html