Written By Em

Em

Em Morley

Landlords have One Month to Meet New MEES

Published On: March 1, 2018 at 10:14 am

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Categories: Landlord News,Law News

As of today, landlords have just one month to ensure that their rental properties meet the Government’s new Minimum Energy Efficiency Standards (MEES).

From 1st April 2018, it will become illegal for landlords to grant new leases – even to existing tenants – on properties with an Energy Performance Certificate (EPC) rating of F or G. This means that all rental properties on new lets or renewals must have a minimum EPC rating of E.

For the past two years, tenants have been given the freedom to request energy efficiency improvements to their properties. As such, the number of F and G rated properties in the private rental sector has declined.

However, landlords who do have F or G rated investment properties must ensure that they are brought up to the new standards before 1st April.

David Cox, the Chief Executive of ARLA Propertymark (the Association of Residential Letting Agents), reminds landlords: “Landlords now only have one month to ensure their properties comply with the Government’s Minimum Energy Efficiency Standards. From 1st April, all rented properties on new lets (including renewals) must be minimum EPC rated E.

“Landlords have been responding to tenants’ demands for better quality and better insulated homes over the last few years; the number of properties which are EPC rated F or G has fallen from around 700,000 in 2012 to 300,000 today. However, there are still a lot which don’t meet the standards.”

He explains the repercussions of failing to comply with the new laws: “After the deadline passes at the end of this month, landlords face fines of up to £4,000 for flouting the law, or losing money on empty properties which can’t be let until they meet the standards. This will also have implications on the wider rental market, which is in the midst of a serious supply crisis.

“There are Green Deal finance plans available and you can contact companies such as Propertymark’s industry supplier ECO-Energi to find out how to upgrade your property for a low cost. For any landlords who haven’t yet started to upgrade their properties, now is the time to act – and quickly.”

If you’ve not yet thought about how you need to improve your properties ahead of the deadline, don’t delay!

Supply of London Rental Properties at Critical Point

Published On: March 1, 2018 at 9:43 am

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Categories: Lettings News

The supply of London rental properties on the lettings market has dropped to a critical point, according to the latest report from ARLA Propertymark (the Association of Residential Letting Agents).

The number of properties available to let in London stood at 46% below the national average in January, the study shows.

As landlords are increasingly priced out of investing and running their lettings businesses in the capital, tenants are finding themselves up against stiff competition for London rental properties.

In January, letting agents in the capital typically managed 99 properties per branch, compared to a national average of 184. It was also the lowest region for property supply in December, but stood at 130 during the month, compared to a national average of 200.

David Cox, the Chief Executive of ARLA Propertymark, comments on the new findings: “The rental market in London should be thriving – the capital is a hub for business and culture, and attracts a huge influx of new residents every year. But the prospect of being a landlord is becoming less tenable, as potential buy-to-let investors are deterred by increased taxes and ever more complicated legislation – and higher property prices in London are making it becoming more and more difficult for landlords to make ends meet.

“Government policies designed to help renters now seem to be having the opposite effect, as landlords are moving away from using professional agents. This puts tenants at risk of falling into the hands of rogue landlords, or novice ones who don’t have any experience in the sector.”

Cox is of course referring to the upcoming ban on letting agent fees, which will prohibit agents from charging upfront fees to tenants. As such, many agents will pass on higher costs to landlords, who may then decide to ditch their agents in favour of self-managing their properties.

The latest ARLA Propertymark figures also indicate that Scottish tenants are experiencing rent hikes due to stricter tenancy rules.

We will continue to keep you up to date with all developments and changes throughout the UK private rental sector.

House Hunters Flooded the Market at the Start of the Year

Published On: March 1, 2018 at 9:04 am

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Categories: Property News

House hunters flooded the property market at the start of the year, the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents), for January 2018, reveals.

Housing demand 

2018 started with a boom for the property market, as demand from house hunters rose by more than a third (37%). In December, NAEA Propertymark member estate agents registered an average of 268 buyers per branch, compared with 367 in January. This is the highest figure recorded since September 2017, when there were 394 registered per branch.

Property supply 

In line with rising demand, January experienced an influx of sellers marketing their properties. The supply of available homes to buy increased to an average of 36 per branch, up from 33 in December.

First time buyers 

In mid-February, UK Finance reported that sales to first time buyers in 2017 hit the highest annual level since the financial crisis.

However, increased competition moving into 2018 looks to be affecting this type of buyer, as sales dropped to 27% in January, from 32% of the market in December.

Mark Hayward, the Chief Executive of NAEA Propertymark, says: “As we usually see in January, buyers and sellers have re-entered the market after the festive slowdown and triggered an uplift in the number of sales agreed. While this is good news for the market generally, the increased competition seems to have affected first time buyers, who generally have less bargaining power when it comes to bidding for properties.

“Our members have noticed first time buyers holding off on making purchases typically outside of London, and saving for longer to maximise the full Stamp Duty relief. They’re skipping the first time home and moving straight onto their second homes, to avoid growing out of their property in four or five years and facing the cost of Stamp Duty. This is a smart move and an example of how first time buyers are making legislation work to their advantage.”

Buy-to-Let Mortgage Costs are on the Up, Mortgage Brain Reports

Published On: February 28, 2018 at 10:05 am

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Categories: Finance News

The cost of a buy-to-let mortgage has started to increase, following the Bank of England’s (BoE’s) base rate rise at the end of last year, according to a report from Mortgage Brain.

Several lenders have raised the costs of their buy-to-let mortgage products in recent weeks as a result of the increase.

The average cost of a two-year buy-to-let tracker mortgage with a 60% or 70% loan-to-value ratio (LTV), for example, is now 3% higher than it was in November 2017.

With an average existing rate of 1.79% and 2.14% respectively, the 3% hike equates to an annual increase of £216 on a £150,000 mortgage.

The cost of an 80% LTV two-year fixed rate deal at 3.44% is now 2% higher than it was three months ago, while its 60% and 70% counterparts, and an average 70% three-year fixed rate deal, are all 1% higher than they were in November last year.

However, borrowers looking for a longer-term deal can potentially expect to secure a cheaper product, as Mortgage Brain’s latest figures show a 2% reduction in costs over the past three months for 70% five-year fixed rates and a 1% decline for the same product with a 60% or 80% LTV.

Despite the recent fluctuations in rates and costs, the buy-to-let mortgage market has also seen the strongest performance in terms of product numbers and availability over the past 12 months.

An additional 721 products were introduced into the sector during 2017, representing a 32% increase in overall product availability – up from 2,238 in January 2017 to 2,959 as of 15th January 2018.

Mark Lofthouse, the CEO of Mortgage Brain, comments: “It looks like the Prudential Regulation Authority changes, coupled with what could be seen as the start of a number of interest rate rises, is starting to affect the cost of mainstream buy-to-let mortgages.

“Buy-to-let product numbers are at a new high, however, and there are still pockets of cost reductions and savings to be had for potential landlords and property investors. With the buy-to-let amarket set to become even more complex in 2018, though, we might be on the start of a new path in terms of mortgage cost movement compared to the past few years.”

Landlords Given Greater Flexibility in New Gas Safety Rules

Published On: February 28, 2018 at 9:36 am

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Categories: Law News

Landlords are to be given greater flexibility in ensuring that annual gas safety checks are conducted in time under new rules.

However, failure to comply with gas and other safety standards in private rental properties are less likely to be tolerated once this freedom is introduced.

On 6th April 2018, new regulations will be introduced that amend current gas safety rules, which came into force in 1998. The Gas Safety (Installation and Use) (Amendment) Regulations 2018 are not aimed at reducing or relaxing safety standards, but allow greater flexibility as to when checks are carried out.

In the future, annual gas safety checks can be conducted in the two months before the due date, while retaining the existing expiry date.

The aim is to avoid last-minute checks, the landlord not being able to gain access to the property, and having to shorten the annual cycle check to comply with the law.

John Cox, a Partner at law firm Bevan Brittan, comments on the new rules: “These amendments should not be construed as an attempt to dilute the consequences of failure to inspect on time. Given the serious consequences for failure to undertake inspections by their due date, this is an attempt to support landlords in overcoming some of the difficulties of gaining access.

“It can be difficult to coordinate the availability of an engineer with approval of access by the tenant. In addition, landlords often try to keep the appointment as close to the renewal date as possible, to avoid any days where the existing and new certificate overlap.”

He continues: “But, in future, it is possible that any failure to comply with the more flexible amended regulations could mean the regulator – Homes England [formerly the HCA] – would see a breach as a fundamental failing for which there is absolutely no excuse.”

Landlords, we remind you to continue keeping up with your legal responsibilities, despite the more relaxed regulations.

Serving the Portfolio Landlord in the Right Way

Published On: February 28, 2018 at 9:05 am

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Categories: Landlord News

By Ian Boden, Sales Director, LendInvest

It is no secret that the property investment landscape has changed over the last couple of years. The prospects of the dinner party landlord, who picked up a property or two during the boom years, have been dented by moves like the additional rate of Stamp Duty on second homes and the changes to mortgage interest tax relief.

In contrast, it’s the professionals who are best placed to adjust their budgets and ride out such changes. These are the investors who spend their working hours – rather than just their spare time – focused on running their property businesses.

This explains why, although we are seeing overall landlord numbers drop, the number of homes available to rent continues to increase. Countrywide’s letting index last August flagged up the fact that the number of homes on the market to tenants has jumped by 171,000 over the last two years, despite the number of landlords falling by 154,000 over the same period.

On the face of it, the time is now for the professional landlord.

Yet the reality is that this particular subset of borrowers is not particularly well served by lenders currently. There aren’t really anywhere near enough lenders active in this market who truly grasp what professional investors need from their financing, and how to design products that adequately meet that need. It certainly isn’t an area that mainstream lenders want to touch, preferring instead to stick to the most vanilla of borrowers they can find.

That clear gap in the market is why LendInvest has now launched into the buy-to-let arena, lending up to £5m on loan-to-values of up to 80%.

From our very early days, LendInvest has been built on providing finance to property investors, whether that’s bridging loans or development finance. Expanding that proposition to include a more traditional buy-to-let product range as well makes sense; we understand these borrowers and what they need and we have the expertise to meet those needs.

Diversifying into new product areas is never as simple as it looks, even if it is into an area of the market that complements your existing proposition. The key is to get the right people in, to start from a position of strength with staff who completely understand the new area of the market.

One of the common issues that we have heard about from brokers has not just been the poor level of choice, but also the disappointing speed of the process with buy-to-let loans. That’s why we have built our first fully online mortgage application tool to support this product, allowing us to issue decisions on lending as swiftly as possible.

Meeting the needs of the professional landlords who will dominate the buy-to-let market from this point on is about more than designing competitively priced deals. They expect a speed and level of service that up to now simply has not been available. But, with our recent launch, that has all begun to change.