Written By Em

Em

Em Morley

UK Property Market Bucks the Seasonal Trend

Published On: December 2, 2016 at 9:24 am

Author:

Categories: Property News

Tags: ,,,

The UK property market has bucked the traditional seasonal trend usually seen at this time of year, according to Agency Express’ Property Activity Index for November.

During November, it is typical to experience a slowdown in activity in the UK property market as we head for the Christmas period. However, last month’s figures show unseasonal strength – new property listings dropped by just 4.7%, compared to 12.2% in 2015, while the number of properties sold fell by 1.8%, compared with 14.7% last year.

UK Property Market Bucks the Seasonal Trend

UK Property Market Bucks the Seasonal Trend

Reviewing its historical data, Agency Express reports that the UK property market has not experienced this level of activity since 2013.

Across the UK, 11 of the 12 regions included in the index recorded robust figures for November.

Last month’s top performing region was East Anglia, where new listings rose by 0.4% and properties sold increased by 2.4% – a record best November for the region.

Other regions bucking the seasonal trend include:

Properties sold 

  • North East: +24.3%
  • Scotland: +6.9%

New property listings

  • Central England: +11.3%
  • South East: +5.9%
  • London: +0.6%

The only region to record a monthly decline in November was Wales. New property listings dropped by 14.8%, while the amount of properties sold was down by 3.2%. However, the decline in the number of properties sold was much lower than that recorded in 2015, when it fell by 11.8%.

Stephen Watson, the Managing Director of Agency Express, comments: “A surprisingly buoyant month for November; month-on-month figures have reported positively across the nation, and year-on-year activity has also increased. It will be interesting to see if the change in trend will have a positive effect on the forthcoming weeks, where we traditionally witness a slowdown until January.”

Have you decided to buck the seasonal trend by buying or selling a property at this usually quiet time of the year?

Cost of a BTL mortgage set to rise as investors choose longer deals

Published On: December 1, 2016 at 1:03 pm

Author:

Categories: Finance News

Tags: ,,,,

Concerning new forecasts indicate that buy-to-let investors face having to pay an extra £6,700 on their mortgage, when new rules on the length of loans are introduced next year.

At present, many landlords opt to take out two-year deals as they are cheaper than long-term loans. However, the Bank of England’s Financial Policy Committee intends to make it harder for landlords to secure short-term loans, after recently being granted more powers by the Government.

Concerns

Many regulators have expressed their concerns over aggressive buy-to-let lending practices at some banks. They feel that a number of investors are simply taking on too much debt and as such, will sink under the pressure of increased interest rates.

As a solution, they want to see more landlords signing up to longer-term, five-year deals, which tend to be higher. This means that borrowers will have to pay more, maybe thousands of pounds, over the life of the loan.

The figure of £6,700 is based on a £150,000 loan at a two-year rate of 1.59%-£199 per month-in comparison to borrowing the same amount at a five-year deal of 2.49%-£311 per month.

This additional £112 per month would mean the borrower has to pay an extra £6,720 over the course of the loan.

Cost of a BTL mortgage set to rise as investors choose longer deals

Cost of a BTL mortgage set to rise as investors choose longer deals

Hike preparation

Andrew Montlake, of London based mortgage broker Coreco, observed: ‘A lot of landlords won’t qualify for a two-year deal, so they have to prepare themselves for a potential hike in their mortgage payments.’[1]

The crackdown from the Prudential Regulation Authority comes into effect in January 2017 and will involve lenders conducting stress tests to make sure borrowers can repay their mortgage payments should rents rise.

Over the last few months, a number of lenders have increased stress tests for potential borrowers from 125% to 145%. The pressure is already on landlords, following a tough year of legislation changes and it will certainly be interesting to see how they cope.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/btl-mortgage-costs-set-to-soar-as-new-stress-tests-push-landlords-into-longer-deals

 

 

Rent rises fall, but ban on fees will see them pushed upwards

Published On: December 1, 2016 at 11:49 am

Author:

Categories: Property News

Tags: ,,,,

The latest data released by the Association of Residential Letting Agents has revealed that during October, rent increases fell to their lowest since last December.

However, the falls are not predicted to last for very long, given the decision to ban letting agent fees announced in last week’s Autumn Statement.

Rent rise falls

According to the figures, the number of letting agents experiencing rent rises for tenants was at the lowest since December 2015. Only 18% saw rent rises in October, down from the 24% recorded in September. In addition, this will well down on the 32% seen in March.

The table below indicates the percentage of agents seeing rent hikes for tenants over the last year:

Rent rises fall, but ban on fees will see them pushed upwards

Rent rises fall, but ban on fees will see them pushed upwards

[1]

Supply

During October, the number of rental properties managed per branch was 180. This was a significant drop from September, when a record 193 properties were managed per branch. What’s more, this was the lowest level seen since June, when there were an average of 176 properties per branch.

Demand from would-be tenants also fell during October, with 34 registered per branch, down from 40 in September.

David Cox, Managing Director at ARLA, said: ‘Just when rents were starting to stabilise, the Chancellor has thrown the biggest curve ball, meaning that rents will unpreventably rise when the tax changes and letting fees ban come into effect. In terms of supply and demand, this month’s findings reflect seasonal expectations and show the market is slowing in the final quarter. With fewer properties available to rent and a drop in the number of prospective tenants registering interest, tenants tend to stay in their current properties until the New Year arrives.’[1]

[1] http://www.propertyreporter.co.uk/landlords/arla-letting-agent-fee-ban-will-speed-up-rent-hikes.html

 

Homeowners More than Twice as Likely to be in Arrears than Landlords

Published On: December 1, 2016 at 11:25 am

Author:

Categories: Finance News

Tags: ,,,,

UK homeowners are more than twice as likely to be in mortgage arrears than landlords, according to Computershare Loan Services.

Homeowners More than Twice as Likely to be in Arrears than Landlords

Homeowners More than Twice as Likely to be in Arrears than Landlords

The firm, which manages over half of all outsourced mortgages in the country, has found that just one in every 166 buy-to-let mortgages (0.6%) are currently in arrears by at least one month, compared to one in every 73 homeowner loans (1.37%).

Computershare’s figures also show a significant regional disparity, with Welsh buy-to-let mortgages almost ten times more likely to be in arrears than those in the East Midlands.

Residential loans in London are more than twice as likely to be in arrears than those in the South West.

The latest House Price Index from Nationwide shows that 90% of mortgages contracted in the past 12 months were on a fixed rate, due to historically low interest rates.

The CEO of Computershare Loan Services, Andrew Jones, comments: “When mortgages fall into arrears, problems can arise for borrowers, lenders and tenants, so loans must be administered in a way that takes into consideration the individual circumstances of every customer.

“Computershare Loan Services continues to lead the way in preventing and reducing arrears by using advanced analytical systems to predict problems and facilitating support for those who need it.

“For over a quarter of a century, we’ve done everything we can on behalf of clients to work with borrowers, particularly those significantly behind on their payments, to find a solution that takes into consideration their circumstances.”

The firm currently services over £71 billion in mortgages and loans, which represents over half of the outsourced mortgages in the UK.

It’s good news for landlords, who appear to be on top of their mortgage payments. However, many will be apprehending the forthcoming reduction in tax relief on finance costs, which will be gradually introduced from 6th April 2017 and will affect around one in five investors.

The Government has provided a guide on how the change will affect you: /government-guide-tax-relief-changes-residential-landlords/

Nationwide Reports Further Slowdown in House Prices in November

Published On: December 1, 2016 at 10:22 am

Author:

Categories: Property News

Tags: ,,,

House prices have slowed yet again, according to the November House Price Index from Nationwide.

Although house prices rose by 0.1% on a monthly basis in November, the annual rate of growth has decreased from 4.6% in October to 4.4%. The average house price in the UK now stands at £204,947, down from £205,904 in the previous month.

House price growth in line with 2015

The Chief Economist at Nationwide, Robert Gardner, explains the figures: “UK house prices increased by 0.1% in November, after taking account of seasonal factors. As a result, the annual rate of house price growth slowed slightly to 4.4%, from 4.6% in October, though this is in line with the growth rates prevailing since early 2015.

Nationwide Reports Further Slowdown in House Prices in November

Nationwide Reports Further Slowdown in House Prices in November

“There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs. Mortgage approvals increased in October, and surveyors report that new buyer enquiries have increased modestly.

“The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect.”

Fixed rate mortgages most popular 

Gardner looks at the mortgage market: “Fixed rate mortgages have remained the most popular product type by a considerable margin in recent years. Data from the Council of Mortgage Lenders suggests that over 90% of new mortgages were contracted on fixed rates over the past 12 months. This may be driven by a desire to lock in record low interest rates.

“The proportion of new mortgage lending contracted on fixed rates has increased considerably since the low point in 2010, when less than half of lending was on fixed rates. In recent years, the proportion of lending accounted for by fixed rate deals has persisted at levels well above those prevailing before the financial crisis.”

He continues: “Fixed rate deals are most popular amongst first time buyers, for whom certainty over monthly payments is likely to be particularly important. Indeed, over the past 12 months, 95% of new mortgage lending to first time buyers was on fixed rates.

“Borrowers taking out fixed rate mortgages have benefitted from historically low interest rates. For example, in October, the average two-year fixed rate (for those with a 25% deposit) was 1.51% – over two percentage points below the level prevailing in 2012. Moreover, for borrowers with a 10% deposit, two-year fixed rates are currently the lowest on record, at 2.42%.”

The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, responds to the latest house prices report: “It would seem that UK buyers are setting a tentative first foot out of their post-Brexit foxholes with a modest increase in new buyer enquiries, just as home sellers, who have remained prominent in the market all year, decide to avoid this seasonal property cold snap and go into hibernation until 2017.

“The UK property market has really taken a battering from a multitude of influences this year, causing uncertainty in the sector, and it has weathered the storm, with prices still maintaining their upward trend this late in the year, albeit slowing the pace.”

He adds: “However, just like the current temperatures, the market will now see stock levels plummet as many choose to put their sale on hold over the festive season and resume their marketing in the New Year. We expect this might see a drop in prices at the last hurdle for 2016 in the December index, although this will be far from unusual and nothing to panic over.”

Failure to Conduct Right to Rent Checks Becomes Criminal Offence

Published On: December 1, 2016 at 9:42 am

Author:

Categories: Landlord News

Tags: ,,,,

From today, 1st December 2016, failure to conduct Right to Rent checks becomes a criminal offence under the Immigration Act 2016.

Landlords and letting agents that fail to carry out immigration status checks on their prospective tenants may now face a criminal sentence of five years’ imprisonment.

Failure to Conduct Right to Rent Checks Becomes Criminal Offence

Failure to Conduct Right to Rent Checks Becomes Criminal Offence

With concerns that more than half of landlords don’t understand their obligations under the Right to Rent scheme, Hamilton Fraser has launched a free audio podcast.

The Immigration Act 2016 was designed to “further crack down on illegal migration” by making it more difficult for illegal immigrants to work, rent and receive support in the UK. The new criminal sanctions put even more pressure on private landlords to make sure that potential tenants have the right to rent.

The Right to Rent scheme came into force from 1st February 2016. Although the new act does not change these responsibilities, it does increase the penalties that landlords and letting agents face.

Landlords and agents will continue to be liable for fines of up to £3,000 per tenant if they do not conduct Right to Rent checks. However, the new law carries criminal fines, up to five years in prison, or both.

The CEO of Hamilton Fraser, Eddie Hooker, comments: “Whilst the toughest sanctions will likely be reserved for unscrupulous landlords and agents who deliberately and repeatedly fail to follow the rules, with so many changes for landlords in the last 12 months, we have genuine concern that even the most diligent landlords could trip up and end up facing a fine if they fail to carry out proper checks. As a result, we are investing in improving landlord resources and producing easy to understand, educational material.”

Despite the new sanctions, the Immigration Act 2016 does make it easier for landlords to evict illegal migrant tenants, sometimes without a court order.

In his role as a brand ambassador for Hamilton Fraser, tenant eviction specialist Paul Shamplina has been appointed to host a special podcast. He says: “To have a defence, landlords must be able to prove that they complied with the Right to Rent scheme. Even some of the most experienced landlords and agents are struggling to understand the complexities of this new legislation, and we hope that an easy to listen podcast might help to raise awareness.”

The podcast can be found on the Hamilton Fraser group sites, including MyDeposits: https://www.mydeposits.co.uk/blogcat/right-rent-need-know/

The Managing Director of the Association of Residential Letting Agents (ARLA), David Cox, also reacts to the new penalties: “New Immigration Act offences for landlords and agents will only be welcome if they achieve the central aim of prosecuting and fining criminal landlords who are supplying substandard accommodation at inflated rents on the peripheries of society’s radar.

“Enforcement is absolutely fundamental to this, and sufficient resource must be devoted to following up applications to the landlord checking service which are refused, and ensuring that properties occupied by over stayers can be made available again as soon as possible.”

Landlords, remember the importance of sticking to the law on Right to Rent so that you avoid facing these new sanctions.