Posts with tag: renters

Tenants being hit by uninsured landlords

Published On: July 15, 2016 at 10:43 am

Tags: Buy-to-Let,insurance,landlords,renters,tenants

UK tenants are being hit with unforeseen costs that are not being covered by their current landlord, according to a concerning new report.

The study from insurance providers Endsleigh shows that many are not insured against features such as boiler repairs, flood damage and property maintenance.

Costly

Data from the report shows that 14% of tenants face unexpected costs averaging £165.41 per year. 70% of these renters said they did not agree with the reasons for these charges.

The investigation of tenants also found:

47% are not expecting rises in rents
45% do not understand their responsibilities under tenancy agreements
83% are happy with their current landlord

41% of landlords questioned said that they would go the extra mile in order to keep hold of quality tenants. 28% stated that they would take on the increased costs of rental increases in order to keep reliable tenants in the property for longer.

Tenants being hit by uninsured landlords

Positivity

David Hadden, head of property at Endsleigh Insurance, acknowledges that, ‘although the research could paint a picture of discontent in the worlds of both landlords and tenants, the positives far outweigh the worries. Noticing the number of landlords surveyed willing to go the extra mile for their tenants is reassuring to say the least, highlighting the fact that they are valued and listened to.’[1]

‘Inevitably, costs will continue to held high on the tenants’ agenda and though unexpected charges may occur in some cases, hearing that almost a third of landlords will absorb these is very encouraging,’ he added.[1]

[1] http://www.propertywire.com/news/europe/uk-residential-tenants-costs-2016070712115.html

Falling mortgage rates favour FTB’s over renters

Published On: July 7, 2016 at 9:07 am

Author: Em Morley

Categories: Finance News

Tags: first time buyers,LTV mortgages,mortgages,renters

New analysis from AmTrust International has found that falling mortgage rates have seen the average interest payments for first-time buyers fall over two years.

The average interest payments for first-time buyers have gone down from £11,327 during Q1 2015 to £10,019 in Q1 of 2016-representing a saving of £1,308.

Low interest rates

Record low interest rates during the first three months of this year has seen interest on a 95% LTV mortgage much more easy to maintain. These types of mortgage are usually used by first-time purchasers who are not able to save for a substantial deposit.

This will come as good news in comparison to Q1 2015, with would-be homeowners recently struggling with spiralling house prices and rising rents.

The table below indicates how two year interest repayments have reduced for a 95% LTV mortgage:

	Two year mortgage interest costs	Annual difference (£)	Annual difference (%)
2013	Q4	£11,804	–	–
2014	Q1	£11,757	–	–
	Q2	£12,491	–	–
	Q3	£13,091	–	–
	Q4	£12,816	£1,012	9%
2015	Q1	£11,327	-£429	-4%
	Q2	£11,078	-£1,413	-11%
	Q3	£10,787	-£2,304	-18%
	Q4	£10,455	-£2,361	-18%
2016	Q1	£10,019	-£1,308	-12%

[1]

Falling mortgage rates favour FTB’s over renters

Rising rents

With the costs of servicing the interest on a high LTV mortgage decreasing, the cost of renting of property continues to rise. During the past 12 months, the annual cost of rent has risen by £300 (3%) from an average of £9,188 in Q1 2015 to £9,488 during Q1 of 2016.

When the cost of renting is compared to the interest cost of a mortgage, renting is £4,415 or 87% more expensive. This difference is £111 more than the £4,305 extra it costs to rent in comparison to paying mortgage interest in the final quarter of 2015.

The cost of servicing a 95% LTV mortgage is also cheaper than it has been at any point since the Help to Buy mortgage guarantee was introduced at the end of 2013. The average interest rate of a high LTV mortgage has been dropping since this inception.

Growing gulf

Simon Crone, Commercial Director at AmTrust International, Mortgage and Special Risks, noted, ‘there is a large and rapidly growing gulf in the cost of housing that favours first-time buyers over renters-providing they can get a foot on the ladder. Record low interest rates mean that those lucky enough to buy their own property are benefitting from lower payments, while rental costs continue to rise, penalising those unable to save enough for a deposit. Such is the gap that homebuyers with 95% loans are able to make savings of more than £4,400 a year and reap the added benefit of paying off the capital of their mortgage.’[1]

‘However, many first-time buyers are unable to save deposit sums-largely as a result of high rental costs-and are therefore reliant on being able to access high LTV mortgages. It is therefore vital that we have a strong, sustainable supply of high loan to value lending to support those with smaller deposits who want to buy a home,’ he continued.[1]

[1] http://www.propertyreporter.co.uk/property/housing-costs-continue-to-favour-ftbs-over-renters.html

More over 50’s renting than ever before

Published On: July 6, 2016 at 11:42 am

Author: Em Morley

Categories: Landlord News

Tags: over 50's renters,rental market,renters,renting over 50

The changing demographic of the UK housing market has been underlined with the news that the number of over 50’s residing in rental accommodation has risen steadily over the last five years.

New research from Saga Home Insurance has revealed that one-third of people aged 50 or over currently live in rental accommodation. This is a rise from just over one quarter at the start of 2011.

Changing circumstances

Reasons for the rise in over 50’s residing in rented accommodation vary. Of course, spiralling house prices mean that many are cashing in for their retirement years.

However, a rise in divorces for couples over 50 has also had an impact. More people over 50 are getting divorced than ever before, with 20% of renters in this age bracket being single and trying to get back onto the housing ladder.

For people living in rented accommodation as a whole, there has been an increase in the number of people under 70. The largest increases have been for those between the 50-54 age bracket.

In addition, people over the age of 50 living in rented accommodation have on average £20,000 worth of contents in their property. However, 59% of people over the age of 50 living in rented accommodation do not have home insurance, leaving them liable to large bills should anything happen to their property.

More over 50’s renting than ever before

Social impact

Roger Ramsden, chief executive of Saga Services, noted, ‘social changes certainly seem to be having an impact on the homes of the over 50’s. It is concerning that so many do not have insurance for their belongings, whilst the landlord has responsibility for repairing the building should anything happen, they are not responsible for replacing valued possessions should they for example be damaged by fire or even a significant water leak.’[1]

‘Without insurance, it is not just people’s own possessions they would have to foot the bill for if they were damaged. Any fixtures and fittings or other items tenants are listed as responsible for in the inventory agreed with the landlord will have to be replaced if they are damaged by tenants, which could add up to a significant sum,’ Ramsden added.[1]

[1] http://www.propertywire.com/news/europe/uk-home-rental-research-2016070612110.html

Mortgage lending at the Nationwide rises by 20%

Published On: May 24, 2016 at 1:09 pm

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,landlords,Mortgage lending,Nationwide,renters

Nationwide Building Society has today announced that their yearly mortgage lending figures are at their greatest level since the financial crisis.

The full yearly results indicate that there has been a 23% increase in statutory profit, with this total standing at £1.279bn.

Mortgage increases

Further figures suggest that gross mortgage lending increased by 20% to hit £32.6bn. Net lending rose by 28% rise to £9.1bn, bringing their market share to 21.4%.

During the past twelve months, the Nationwide has lent to 57,200 first-time buyers, accounting for one-sixth of all cases.

What’s more, the Nationwide increased their maximum limits for mortgages from 75 to 85, giving it the highest age threshold of any lender on the high street.

Mortgage lending at the Nationwide rises

Testament

Nationwide chairman, David Roberts, said, ‘these results are a testament to always putting our members first. I would like to thank Graham Beale for his huge contribution to the Society which has left the business in great shape, prospering as a modern mutual and I wish him well for the future.’[1]

‘I am delighted to welcome Joe Garner as Nationwide’s new Chief Executive. Joe stood out as someone with a deep understanding of the sector, who has championed customer interest throughout his career and who will set the strategic direction for the Society and our people.’[1]

Mr Garner, newly appointed chief executive of the firm, added, ‘it’s a credit to the management and people of the Society that they have consistently understood this and organised Nationwide around this principle. As a result, last year we lent more money to help people into a home of their own than since before the financial crisis in 2007.’[1]

[1] http://www.propertyreporter.co.uk/finance/gross-mortgage-lending-at-nationwide-soars-by-20.html

64% of would-be homeowners rent first

Published On: May 24, 2016 at 10:58 am

Author: Em Morley

Categories: Property News

Tags: deposit,first time buyers,property,rental market,renters

Nearly two-thirds (64%) of would-be homeowners in Britain rent a property before picking up the keys to their own place, according to new research.

Data from the report by Clydesdale and Yorkshire Banks underlines the difficulty that many potential buyers are facing in the current market.

Renters’ struggles

Saving up for a deposit is one of the greatest hurdles facing first-time buyers. The survey found that renters are not likely to get assistance from their family, with only 41% saying that this was the case. This was in comparison to 62% living with their parents.

Building up a sufficient deposit is also a challenge to tenants currently living in the rental market, with an average months rent standing at £681.70.

Of those living with their parents before purchasing their own home, 21% said they don’t pay rent. One-third of would-be homeowners said that they put this money towards their deposit instead.

52% said that they pay a fixed amount each month to their family, with 22% contributing towards food and bills.

Stress

In addition, the research found that those currently residing in rental properties find getting a foot on the property ladder more stressful. 28% admitted they were finding the process difficult, in comparison to 16% of those still living with their parents.

Steve Fletcher, head of customer banking networks at Clydesdale and Yorkshire Banks, said, ‘buying a first home is one of life’s most significant financial milestones and the banks can work with the individual needs and circumstances of potential first time buyers to help make their dreams of becoming a homeowner a reality.’[1]

64% of would-be homeowners rent first

Cover

Additional research conducted by Royal London indicates that nearly five million renters in Britain have no plan in place to cover their rental payments, should they become too ill to work.

This alarming figure comes despite 27% of renters in work saying they were aware of someone who had struggled in a similar situation. 34% admitted they didn’t know how long they could pay their rent for should they be unable to continue in their employment

60% said that they could only continue paying their rent for three months or less.

Solutions

In terms of solutions, 53% said their first move would be to apply for state benefits, while 47% would cut their expenses and 39% would use their savings.

Just 7% of renters in employment said that they had consulted a financial advisor.

Debbie Kennedy, head of protection for Royal London Intermediary, noted, ‘renters who assume that housing benefit will be there when they need it could find the reality is very different. A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly.’[1]

‘It would be bad enough to be taken ill without the added anxiety of getting behind with the rent and facing possible eviction. Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better,’ Kennedy added.[1]

[1] http://www.propertywire.com/news/europe/uk-property-market-buyers-2016052411948.html

Financial stability of British renters revealed

Published On: May 20, 2016 at 12:16 pm

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,homeowners,rent,renters

An interesting new report has revealed that a rising number of UK adults are struggling to purchase a home. This in turn is causing them poor levels of financial wellness, according to the Momentum UK Household Financial Wellness Index.

The Index was conducted by the University of Bristol’s Personal Finance Research Centre and is the first of its kind to assess the financial wellness of the UK.

Poor planning

Financial wellness is split between homeowners and non-homeowner, with tenants suffering down to a lack of assets and poor long-term planning.

Those with a mortgage average 71/100 Index points, with those owning a property outright gaining 74/100. However, those in rental accommodation average financial wellness points of 62/100 for private renters and Housing Association tenants and 60/100 for Local Authority.

The lack of substantial difference in score between private renters and those in social housing shows that despite their relatively greater incomes, private tenants are being made financially unstable by their living arrangement.

Spending

The Office for National Statistics’ Economic Review suggests that renters spend almost 20% of their income on rent. This figure rises to 25% for private renters, rising by 10% in the last three decades.

These costs are evidenced in the Index’s findings, which show that renters are half as likely than homeowners to suggest that that their income can cover their monthly outgoings. In addition, renters were revealed to be half as likely to say they are comfortable with their standard of living.

What’s more, double the amount of renters said that they had missed a minimum repayment on their credit card, loan or other debt during the past twelve months.

Financial stability of British renters revealed

Hardship

Ferdi Van Heerden, CEO of Momentum UK, noted, ‘the financial hardships being faced by renters are making it impossible for them to build the deposit necessary to get their foot on the property ladder. Soon we will see a situation where only those who already own or inherit property will be able to own a home.’[1]

‘Private renting is on the increase from 6% of the population in 1988 to 16% in 2014. By contrast, the prevalence of mortgaged home ownership among under 40’s is lower than in 1977, when the Right to Buy was introduced to address just such an issue,’ he continued.[1]

Long-term impact

Renters were also found to be more likely to see their financial prospects hit due to the effect that renting has on their overall income. According to the Index, tenants are twice as likely to have no savings, insurance or pensions in place. In addition, they are twice as likely as homeowners to have nothing in place for their retirement.

Mr van Heerden concluded by saying, ‘if we do not address the UK’s rental trap, we are effectively creating a lasting social divide between the haves and have nots. We cannot simply assume that the current system will resolve this issue and action must be taken to address this.’[1]

[1] http://www.propertyreporter.co.uk/landlords/the-rental-trap-financial-wellness-of-uk-renters-revealed.html