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Em Morley

Buy-to-let mortgage sales fell in March

Published On: April 21, 2016 at 9:03 am

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Interesting new data has indicated that there was actually a fall in buy-to-let mortgage sales in March. This is surprising given the expected rush of business to beat the additional stamp duty deadline.

Research from Equifax Touchstone suggests there was a decline of 26.2% in buy-to-let mortgages during March.

Sales

The report also showed that residential sales were up by 1.4% from February to hit £12.95bn. These were the greatest monthly sales figures since the financial crash in 2008.

However, combined residential and buy-to-let sales in the intermediated market fell by 5.1%, or £855.7m from the previous month.

By region, Scotland was the only area to see an increase in sales in March. Northern Ireland saw the sharpest drop, with sales down by nearly 20%. London saw falls of almost 10% month-on-month.

In addition, data from the report also showed the average value of a residential mortgage was £190,091 and £157,819 for buy-to-let let. These figures were up from the £179,187 and £157,819 respectively, as seen in March.

Buy-to-let mortgage sales fell in March

Buy-to-let mortgage sales fell in March

Taking advice

Iain Hill, Relationship Manager of Equifax Touchstone, noted, ‘recent buy-to-let mortgage flows indicate that borrowers took the advice of their lenders and initiated transactions in good time to avoid an eleventh-hour panic.’[1]

‘The big question from here is, to what extent will the new stamp duty rates discourage investors from entering into new deals? With so much economic uncertainty, property remains an attractive investment option for many people. Given the rollercoaster first quarter of 2016, it will be interesting to see where sales trends go from here,’ Hill added.[1]

[1] http://www.propertyreporter.co.uk/finance/btl-sales-dr0p-%C3%A3%C2%A21bn-in-march.html

 

Client Money Protection May be Made Mandatory for Letting Agents

Published On: April 21, 2016 at 8:38 am

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Client Money Protection (CMP) at last made it into the Housing and Planning Bill yesterday, after an amendment from Baroness Hayter and Lord Palmer was approved.

The amendment would ban letting agents from taking money from tenants and landlords unless they hold separate client money accounts. It was added to the bill during

Client Money Protection May be Made Mandatory for Letting Agents

Client Money Protection May be Made Mandatory for Letting Agents

the report stage in the House of Lords.

Although the amendment does not make CMP mandatory, it allows the Government to review the need for a compulsory measure.

It is believed that the Housing Minister, Brandon Lewis, ruled out enforcing CMP, however, Baroness Hayter said that “constructive” discussions with ministers had led to a change of course.

She said the amendment will “require every letting agent to have money they hold belonging either to the tenant by way of advance rent or to a landlord as rent received to be protected, so that even if the letting agent disappeared or went bankrupt, such money would be safe and available to the landlord.

“Such money is not the agent’s money and, as with clients’ money handled by solicitors and others, should be held separately in a protected client account.”

Just last week, Lewis seemed to rule out introducing CMP during a speech at the Association of Residential Letting Agents (ARLA) conference, when he said he did not want to create too much regulation for the sector.

The Managing Director of ARLA, David Cox, responds to the amendment: “This is positive news for consumers and a great example of the industry and policy makers working together to champion consumer interests. At present, property agents are not legally required to join CMP schemes, which leaves tenants and landlords at risk of losing money.

“This new measure means that when Government reviews its property transparency measures later this year, there is a real chance that CMP could finally become mandatory for all property agents in the UK. Consumers may finally have a guarantee that their money is safe and we will continue to work alongside the Department for Communities and Local Government to make this a reality.”

London Landlord Fined £16,000 for Category 1 Hazards

Published On: April 20, 2016 at 11:27 am

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A London landlord that rented out a hazardous property to a family for years has been prosecuted by Harrow Council and ordered to pay fines and costs of more than £16,000.

London Landlord Fined £16,000 for Category 1 Hazards

London Landlord Fined £16,000 for Category 1 Hazards

Following a complaint from the tenant, Harrow Council’s environmental protection officers inspected Kanagaratnam Kesavan’s rental property on Rayners Lane, finding the house in a poor and dangerous condition.

Officers discovered category 1 hazards relating to excess cold, electrical hazards, personal hygiene sanitation and drainage, fire and food safety.

The long list of risks to the tenants included broken windows, broken electrical sockets, exposed wiring, a broken cooker, damaged and missing doors to kitchen units, missing tiles and a constantly running tap.

Kesavan was served with two improvement notices under the Housing Act 2004, requiring remedial works to be conducted to address the category 1 hazards. A further two notices were then served under the Environmental Protection Act for a broken boiler and water penetration from the toilet into the kitchen. Kesavan did not appeal these notices, nor did he contact the council to discuss the notices or works.

During a formal interview, Kesavan admitted to the offences of not complying with the notices, but blamed the tenants’ lifestyle for the damage. Evidence was presented to Willesden Magistrates’ Court on 15th March, to which he pleaded guilty and was fined and ordered to pay costs totalling £16,120

The Portfolio Holder for Environment, Crime and Community Safety at Harrow Council, Councillor Graham Henson, says: “All Harrow residents should be able to live in good quality accommodation, and I am shocked that someone would rent their property out while it was in such dangerous and life-threatening disrepair. Mr. Kesavan showed no interest in the safety of his tenants, nor did he bother to discuss the notices issued to him by the council. It could have been worse had our officers not intervened.

“Thanks to the hard work of our officers, we have had a successful prosecution. I hope that this sends a strong message to others that this is unacceptable.”1

1 http://www.harrow.gov.uk/news/article/373/landlord_hit_with_£16k_penalty

Universal Credit Scheme is “Shambolic”, Say Landlords

Published On: April 20, 2016 at 11:07 am

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The Government’s new welfare system, Universal Credit, has been described as “shambolic” by landlords, with many saying they will now refuse to rent to tenants on benefits.

Research conducted by the Residential Landlords Association (RLA) indicates that the new scheme may have a disastrous effect on the private rental sector. The organisation found that landlords are frustrated with the new system, which sees benefits paid directly to claimants, who are then responsible for paying their own bills, including rent.

Landlords have also criticised the way that the Department for Work and Pensions is dealing with their enquiries and say the process for requesting direct payments from the Government is too long.

Universal Credit Scheme is "Shambolic", Say Landlords

Universal Credit Scheme is “Shambolic”, Say Landlords

We have been providing landlord updates on the nationwide rollout of the scheme since the start of the year. For all of the postcode areas now on Universal Credit, see our latest piece: /universal-credit-almost-end-rollout/

One landlord that responded to the RLA says: “The Universal Credit system is mysterious, unresponsive and devoid of communication. I have made three applications. I received one payment, but no statement and I have no idea what the payment was for. I have not received any communication in response to the other applications.

“There are very long delays which are unacceptable, as arrears mount and I still have to pay the mortgage with no rent income. This is a disaster and will result in increased homelessness.”

The transfer from the old system to the new has also been slammed, with complaints about missing and delayed payments, leaving tenants in rent arrears. It has previously been reported that housing benefit claimants are being left in long-term debt.

The issue is now so severe that many landlords say they will no longer rent to tenants on benefits.

Another landlord insists: “I will stop renting to people on Universal Credit as I won’t get rent to cover mortgage payments. The system whereby tenants get payment rather than the landlord is shambolic, universally disliked, makes tenants vulnerable to addictions and homelessness, and prevents landlords from renting to people in receipt.”

The Policy Adviser for the RLA, Richard Jones, states: “Universal Credit and associated reforms make it harder to rent to people on low incomes and housing benefit, and we have a building body of evidence that the changes are making it harder for people in difficult situations to get their lives back on track.

“We acknowledge that the Department for Work and Pensions [DWP] has taken some action to correct things, but there is still a lot of work to be done. The issue is whether the DWP can deal with the scale of these issues, given that they have only been dealing with the simple cases so far.”

The RLA is currently organising meetings with the Government to discuss Universal Credit.

If you are a landlord with tenants on benefits, you can protect your rental income with Rent Guarantee Insurance, which ensures you still get paid if your tenant defaults.

Which Feature Adds the Most Value to House Prices?

Published On: April 20, 2016 at 10:45 am

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Having a spare bedroom is the number one feature that adds the most value to house prices, according to the latest survey by eMoov.

The estate agent asked over 1,000 UK homeowners what they think adds the most financial value to a property when looking to buy a new home.

A spare bedroom topped the list, with a quarter (25%) of those asked believing that this would justify a higher house price. Not only is a spare room great for guests, but it can also be used as an office or nursery. You may also like to rent the room out, now that the tax-free lodgers allowance has been increased.

And while the British summer is usually brief, outdoor space is the next feature that adds the most value to homes, with 19% of homeowners believing it justifies a higher price.

The garage is the third best feature, according to 16% of respondents, and an ensuite bathroom to the main bedroom came out in fourth, with 13% of homeowners believing this adds the most financial value.

Completing the top five is an extra car parking space, cited by 11% of respondents.

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Which Feature Adds the Most Value to House Prices?

Which Feature Adds the Most Value to House Prices?

5% of homeowners think good local amenities will add the most value, while 4% believe a strong internet connection is the most justified. A strong mobile phone signal was considered the best feature to boost a property’s price by 3% of respondents.

Just 2% believe a good community spirit will add value to a house price.

The CEO and founder of eMoov, Russell Quirk, says: “Often those looking to sell will pour money into additional DIY projects around the house, in an attempt to increase the value of the property and justify pushing up their asking price by a few thousand pounds or more. Unfortunately, a lot of the time they may as well be pouring it down the drain, as potential buyers will care little for aesthetic improvements, due to having their own long time view of how they want the property to be.”

He continues: “This research goes to show that it’s the fundamentals people are concerned about: the number of bedrooms in case they want friends to stay or wish to start a family; outside space to entertain or for the kids to play in; a garage to store that accumulated clutter as the years pass by; an ensuite so you can have a bath in peace; or that extra parking space for when the 17th birthday rolls round.”

Quirk adds: “It is a little disappointing that a good community atmosphere ranks so lowly amongst homeowners. I know it doesn’t necessarily add value, although on the flip side, a bad atmosphere can certainty lower an asking price, however, it goes to show that the community spirit that has been so prevalent in years gone by is rarely thought about now.”

Private Housebuilding Rates at Lowest Level for Almost Three Years

Published On: April 20, 2016 at 9:13 am

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Private housebuilding is rising at the lowest rate for almost three years, according to the UK Construction Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Although the Government has pledged to deliver 200,000 new homes by 2020, the RICS reports that growth in the private housing sector slowed down considerably over the first quarter (Q1) of this year.

Private Housebuilding Rates at Lowest Level for Almost Three Years

Private Housebuilding Rates at Lowest Level for Almost Three Years

During the first three months of the year, private housebuilding rose at the slowest pace since Q2 2013, with just 36% more of those working in the sector reporting a rise in growth rather than a fall. In Q1 2015, this figure was close to 50%.

Across all sectors, the survey shows that while 33% more respondents saw workloads increase rather than decline in the final quarter of 2015, this figure fell by 5% in Q1 2016.

Confidence in the future of housebuilding also dropped, with the amount of construction professionals expecting to see workloads rise over the next 12 months exceeding those predicting a fall by 55%. However, this time last year, a huge 79% more respondents expected to see workloads increase.

Meanwhile, following 4% employment growth in 2015, respondents expect headcounts to continue rising in the next year, with a net balance of 41% forecasting an average growth of 2%.

The Chief Economist at the RICS, Simon Rubinsohn, comments: “On the surface, it might seem surprising that we are witnessing a slowdown in the construction sector just a few months after hearing the Chancellor’s ‘We are the Builders’ speech, given the Government’s significant commitment to this sector.

“One might well ask why growth in private housing workloads is softening at a time when policy is firmly focused on the creation of new starter homes. We have long held the view that starter homes cannot be the only solution. There is an issue around the availability of land on which new houses can be built, and we would like to see more being done to free up private brownfield sites.”

He continues: “Our survey tells us that planning delays are one of the biggest barriers to growth in the construction sector. We have recommended that councils work together to create a team of emergency planners who can parachute into boroughs that are experiencing significant delays, therefore reducing a major growth barrier.

“That said, we cannot discount the climate of uncertainty caused by the forthcoming EU referendum. We know that a range of sectors have been affected by these issues, as investors look to delay any decisions until a final outcome has been determined, and construction is no exception.”

Indeed, it is expected that house prices and sales will fall as the EU referendum approaches.