Written By Em

Em Morley

Nationwide announces new measures to combat unfair leasehold terms

Published On: May 4, 2017 at 12:06 pm

Tags: ground rents,leaseholds,mortgages,Nationwide

The Nationwide Building Society has announced that it is to launch a new valuation policy for new build leasehold properties. This is aimed a protecting its mortgage members for suspect leasehold terms and spiralling ground rents.

As such, the Nationwide is the first large lender to impose more transparent lending conditions on these sorts of property.

Valuations

For valuation purposes for all new mortgage applications on new builds received from 11^th May 2017, the minimum acceptable lease term will be 125 years for flats and 250 years for houses.

What’s more, the maximum acceptable starting ground rent on all new build leasehold properties will be limited to 0.1% of the overall property value.

Terms of the agreement state that the ground rent must be reasonable at all times during the lease. Doubling of rent every five, ten or fifteen years will not be permitted without good reason.

Unfair leasehold terms and increasing rents have recently seen much media attention and political criticism.

Nationwide announces new measures to combat unfair leasehold terms

Safeguarding

Robert Stevens, Nationwide’s Head of Property Risk, Data and Strategy noted: ‘As a mutual building society that looks to protect its members, we have decided to make changes to the way we value new build properties on a leasehold basis. We are doing this to address the practice of using leasehold tenure where this is unnecessary, particularly for new build houses, and to ensure that onerous leasehold terms, including ground rents, are properly considered and controlled in order to safeguard our mortgage members.’[1]

‘Nationwide is taking a proactive, leading position on this issue to address a significant risk facing our members and to challenge what we believe to be poor practice in the new build market,’ he added.[1]

[1] http://www.propertyreporter.co.uk/property/nationwide-announce-new-measures-to-combat-unfair-leasehold-practices.html

North East property prices continue to rise

Published On: May 4, 2017 at 11:29 am

Author: Em Morley

Categories: Property News

Tags: landlords,North East,North East property,property,property prices

Property prices in the North East have defied forecasts of a worsening UK economy to post their strongest month-on-month growth this year to date.

House values in the region rose by 1.9% during April, adding an average of £3,099 to the price of a typical property.

In March in February, prices slipped by 0.1% and in January, by 3.1%.

Values

Average regional property prices in the region are now 6% higher than 12 months ago, with the typical value standing at £9,591 greater than in April 2016.

An average North East home will currently set one back £166,566, in comparison to £163,467 at the end of March.

18 of 20 North East regions saw prices rise, with strong performances recorded in South Shields (5.4%), Blyth (4.7%) and Kilingworth and Easington (3.2%).

The only areas to see falls were Cramlington (-0.9%) and Jarrow (-0.3%.)

North East property prices continue to rise

Rents

In terms of rents, these rose by £585 in April-a rise of £9.

Increasing property prices have forced rental yields downward slightly. Property investors in the region are now seeing average returns of 4.2%.

Investors in the North East are continuing to see higher returns than those in London, where yields stand at 3.2% typically.

Good News

Ajay Jagota, founder and MD of Keep It Simple and Dlighted, said: ‘After three months of negative growth it’s very good news to see North East house prices making up lost ground over the past four weeks and in a markedly stronger position than twelve months ago, with prices the best part of £10,000 higher than this time last year.’[1]

‘The run up to a General Election generally means flat house prices as buyers and sellers adopt a ‘wait and see’ approach, and even though this election has come slightly out of the blue I’d expect to see the same thing happen in May and June, with prices moving forward again come the summer, a traditionally strong period.

Average asking prices for UK homes this week reached £313,000, all but double the North East average. When you combine that with historically low mortgage deals currently available for both owner-occupiers and investors, the North East remains a phenomenally good value location to make a home or invest in one,’ Jagota added.[1]

[1] http://www.propertyreporter.co.uk/property/north-east-house-prices-rally-as-election-announced.html

Lender Targets High Net Worth Buy-to-Let Investors with New Range

Published On: May 4, 2017 at 10:03 am

Author: Em Morley

Categories: Finance News

Tags: buy to let mortgages,buy-to-let finance,high net worth,mortgages

Lender Targets High Net Worth Buy-to-Let Investors with New Range

Specialist mortgage lender Investec Private Banking is hoping to attract more high net worth buy-to-let investors with a new range of buy-to-let mortgages.

The selection of two, three, four and five-year fixed rate buy-to-let mortgage products on offer have been linked to Investec bank’s base rate, rather than the three-month LIBOR.

The fixed rate deals, available to individual landlords and those investing through a limited company structure, feature rates starting from 2.69% at 50% loan-to-value (LTV), and are available up to 70% LTV.

The buy-to-let base rate tracker product currently has rates starting from 2.25% over Investec bank’s base rate of 0.25% at 50% LTV, with rates also available up to 70% LTV.

A Business Development Manager at Investec Private Banking, Peter Izard, comments on the new range aimed at high net worth landlords: “We’re delighted to be expanding our buy-to-let range by offering brokers and their clients a choice of competitive fixed rates or trackers linked to Investec bank base rate.

“Our proposition is designed to appeal to high net worth borrowers, particularly those looking to acquire rental property in the higher value prime central London and South East property markets.”

The high net worth range follows an announcement from Paragon Mortgages yesterday, which included details of its updated buy-to-let range, with longer term planning in mind.

Landlords – including high net worth individuals – thinking of investing in the buy-to-let sector must be aware of the Government’s reduction in tax relief on mortgage interest and other finance costs, which is currently being gradually introduced.

Some basic rate taxpayers may be forced into the higher tax bracket as a result of the changes.

Building Owners Must Act Now to Comply with MEES

Published On: May 4, 2017 at 9:41 am

Author: Em Morley

Categories: Property News

Tags: commercial property,energy efficiency,EPCs,MEES

Building owners, including those of commercial premises, must act now to avoid breaking new laws and comply with the Minimum Energy Efficiency Standards (MEES).

Building Owners Must Act Now to Comply with MEES

From 1^st April 2018, it will be illegal for landlords to grant new leases to new or existing tenants for properties in England and Wales that do not meet the Government’s MEES – part of the Private Rental Sector Energy Efficiency Regulations 2015.

It will be the landlord’s responsibility to ensure that the property has an Energy Performance Certificate (EPC) rating of E or above. However, it is estimated that up to 20% of all non-domestic properties in England and Wales could have an F or G rating.

In most cases, it will be illegal to let a property without an EPC, or with a rating of F or G.

Energy performance assessment specialist Elmhurst Energy is encouraging building owners to act now by commissioning an up-to-date EPC that will not only identify the current rating – which may have changed over time – but will also recommend opportunities for improvement.

The Managing Director of Elmhurst Energy, Martyn Reed, explains: “Owners of commercial buildings are running out of time to make improvements to their building, as it will take time to implement energy saving improvements.

“It is vitally important that facilities and energy managers assess the energy efficiency of their non-domestic properties by commissioning an energy assessment to establish the current rating and to identify what measures must be implemented between now and April 2018.”

There are some exemptions, for example, if the property does not require an EPC under current regulations, if the landlord can demonstrate that they have implemented all cost effective energy improvements, or the required improvement will devalue the property. However, landlords should not see exemptions as a loophole.

All building owners must also be aware that from April 2020, it will be illegal to let a property with an EPC rating below E, even when the lease is already in place. Elmhurst Energy also expects the regulations to be raised to prohibit rental of properties rated D or E from 2030.

What measures are you taking to comply with the MEES?

Poll Shows that the General Public Supports the Ban on Tenant Fees

Published On: May 4, 2017 at 8:28 am

Author: Em Morley

Categories: Property News

Tags: letting agent fee ban,letting agent fees,letting agents,tenants

A new poll by Citizens Advice shows that the general public supports the Government’s proposed ban on tenant fees charged by letting agents, while most of those in favour of the fees believe that private renters should only be required to pay a nominal amount to secure a property.

Poll Shows that the General Public Supports the Ban on Tenant Fees

The charity has found that tenant fees currently cost an average of £337 per person, but ARLA Propertymark claims that around £200 per tenant is a more realistic figure for fees relating to a range of administration, including references, credit and immigration checks, as well as the drawing up of tenancy agreements.

Yesterday, ARLA Propertymark called for tenant referencing to be exempt from the lettings fee ban.

However, the survey by Citizens Advice found that 46% of Britons think that tenants should not pay any admin fees or charges, above a tenancy deposit and first month’s rent when using a letting agent. Meanwhile, 61% supported an outright ban on tenant fees when renting property direct from a landlord.

When asked how much is too much when it comes to tenant fees, almost two thirds of respondents (61%) thought that tenants should pay no more than £50 to secure a property. This figure increases to three quarters (74%) when looking at the results for private landlords.

The findings show that many people are happy with the idea that tenants should pay a small fee to cover legitimate expenses during the tenancy application process, but less than 10% of respondents thought that tenants should have to pay more than £150 to secure a property.

Nick Marr, the Co-Founder of TheHouseShop.com, which commissioned the YouGov research, says: “Our latest YouGov survey results clearly show that there is little public support for the current system where tenants can end up paying hundreds of pounds in admin fees to secure a new property.

“In fact, the majority of people said that tenants should pay a minimal fee of no more than £50.”

He believes that there is plenty of evidence to show that a growing number of tenants are actively seeking out private landlords in an attempt to “avoid the hefty fees charged by some letting agents”.

He adds: “Many tenants are prepared to pay a small fee for legitimate expenses involved in securing a property, such as a professional reference check, as this has become common practice even among private landlords – but vague and undefined admin charges that can total hundreds of pounds are tough to defend in the current market.”

Could rent controls kick-start a seaside town property revival?

Published On: May 3, 2017 at 9:57 am

Author: Em Morley

Categories: Property News

Tags: landlords,rent controls,seaside towns,tenants,Tories

A new report has suggested that the Conservative Party should build their election manifesto around rent controls, in order to kick-start a seaside town renaissance.

The Housing and Finance Institute believe that dysfunctional housing markets are driving decline in many coastal communities.

Trio

The report suggests that a ‘toxic trio’ of substandard housing, high volume of renters and a lack of new jobs are leaving tenants and taxpayers overpaying for properties that are not worth the rent.

As such, the Housing and Finance Institute wants to see the introduction of new time-limited and more localised rent controls in the more less-off coastal communities.

It has called for a locally assessed ‘fair value rent regime’ that would reflect a property’s location and overall quality. The Institute is additionally calling for more support from central Government for councils with communities feeling the effects of failed housebuilding markets.

Could rent controls kick-start a seaside town property revival?

Skills

In addition, it wants to see more financial and skillset support from central Government for deprived locations-where housebuilders, developers and investors do not want to purchase.

Natalie Elphicke, chief executive of The Housing & Finance Institute, noted: ‘There is a toxic trio of abnormally high proportions of rented housing, for that rented housing to be of poor quality, and a lack of job creation. Dysfunctional housing markets are proving fundamental to the spiral of decline in many of Britain’s coastal communities – and something radical must be done to turn the tide.’[1]

‘The proposals in this paper can help to break up the concentration of housing poverty and attract new high quality building and investment. Housing can be pivotal to securing jobs, growth and reversing entrenched deprivation. In particular, a new fair rents regime would significantly speed up the renewal of the most deprived areas, drive a fairer deal for tenants and taxpayers – and kick-start much needed regeneration,’ she added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/tories-urged-to-back-rent-controls-to-kick-start-a-seaside-town-renaissance