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Lenders offering new Products to Landlords

It’s not surprising that with the private rental sector doing so well a number of lenders are trying to cash in on their customers’ success. For many, the private rental sector is an extremely wise place to invest in at the moment, as a number of reports are suggesting that demand for private rented property will remain at a high level for the next few years at the very least.

However, as a landlord you should be wary of any special offers, as they can sometimes be too good to be true. While many people see the private rental sector as a good place to invest in, others see it as something to manipulate in order to make money unscrupulously. This is why PropertyQuoteDirect looks in more detail some of the newest products being offered to landlords: Continue reading

Landlords get go-ahead for class action against Bank of Ireland

Due to the state of the economy many banks are becoming more stringent when it comes to lending mortgages, which has led to many people struggling to buy their own home. This has put even more demand on the private rented sector, and while buy-to-let landlords are more likely to get mortgages from the bank, there are still difficulties some face when it comes to making sure they are getting a good deal and not end up paying for expensive fees and charges. Continue reading

Housing Activity on the rise claims report

Since George Osborne announced his plans for the housing industry in the budget last month there has been speculation from many members of the property industry as well as the private rented accommodation sector as to how his plans will work. The ‘Help to Buy’ scheme has been widely criticised as many feel that helping members of the public buy a property is not enough, and that the government should allow buy to let landlords to take advantage of the new scheme in order to alleviate demand for private rented accommodation.

However today it has been revealed in a report by the Royal Institute of Chartered Surveyors (RICS) that the housing market may actually be on the rise, and that there has been an increase in interest from potential buyers looking for a home. RICs went on to admit that even though the figures are well below that of the housing ‘boom’ years, they are still on the rise and are now at a three year high. Discussing the property market, Peter Bolton King from the Institute said: “A buoyant, healthy property market is central to economic recovery, and while these are very much early signs, it is encouraging that sales are beginning to pick up.”

The figures showed that compared to February last year the number of house sales in the UK rose by ten per cent, and it has been suggested that this is down to first time buyers being determined to buy a property even though they need to save around twenty per cent for a deposit. However, buyers have been warned that saving for a deposit is only one thing, actually affording the repayments will also be extremely difficult for some as mortgage interests rates are at their highest levels since the past twenty five years.

For example, Sylvia Waycot from Moneyfacts warned: “It’s easy to get caught up in the excitement of heavily marketed mortgages that shout out about low interest rates, but beware that they will often be at the expense of high fees. The average fees charged have risen by almost 8% since January, though it is hard to justify how setting up costs can possibly have risen by this much.” It seems that even though the property market may be improving, buying a property is still risky, and so if you are planning on investing in a new house you should contact your landlord insurance provider for advice.

Landlords warned of increase in Rent Arrears

Due to the housing crisis, the economic climate and the introduction of the welfare reforms, many buy-to-let landlords are concerned that their tenants will soon start to struggle financially and end up falling into rent arrears. Banks across the country are also concerned by the expected increase in tenants falling into rent arrears, as if they do so it is likely that landlords will start defaulting on mortgage repayments, which is leading to banks becoming more discerning when it comes to lending new mortgages.

To make things worse, a recent report by LSL Property Tracker called the Tenant Arrears Tracker has shown that in the first quarter of 2013 rent arrears increased by from just 4,000 to a massive 94,000. This means that 2.3 per cent of all tenants in the UK are now in rent arrears, which has led to a huge increase in evictions with 25,286 tenants being given notice in the final quarter of 2012 alone. Paul Jardine, director at property receivers at Templeton LPA, which is a part of LSL said: “Household finances are feeling the impact of spiralling costs, particularly energy bills, which were recently predicted to grow by an average of £214 this year. And wallets are under pressure from the other side.”

“According to the ONS [Office of National Statistics] wages are creeping along at 1.2 per cent annual growth, well behind a rebounding rate of inflation. Many tenants have finally pulled their finances back together after the strain of the festive period. But for a significant minority the situation is actually much worse than three months ago, and this is reflected in the most severe tenant arrears.” It would be wise for buy-to-let landlords who are concerned over their tenants falling into rent arrears to invest in a landlord insurance policy with rent guarantee, however Mr Jardine also pointed out that banks are trying to help landlords that are struggling.

He said: “In the first few months of 2013, lower mortgage repayments have allowed landlords more room for flexibility. As hoped, Funding for Lending has proved instrumental in lowering mortgage rates, especially for landlords with the most equity. While the current environment allows landlords more time in any given month to wait for a payment, it doesn’t fundamentally change the ability of tenants to pay rent. The latest rise in eviction orders highlights the need for long-term solutions that work for both parties.”

Mixed reaction to Budget’s housing plans

Yesterday George Osborne officially announced the Budget for the next year, and as expected he discussed the importance of investing in and creating new housing. In order to improve the housing market and help get more families on the property ladder or move into second homes, the government have launched two new schemes under the ‘Help to Buy’ plans. The first scheme will be targeting would-be buyers, as the government is promising to give those that save up a 5% deposit a 20% interest free loan towards buying a property. The second scheme is aimed at encouraging lenders to give mortgages to those with small deposits in order to boost the housing sector.

However, not everyone is convinced that the new Help to Buy schemes will work, and some have even stated that Mr Osborne has missed the point altogether when it comes to solving Britain’s housing crisis. For example, Jonathan Moore, managing director of Easyroommate.co.uk, said: “The Help to Buy scheme will go some way towards releasing some of would-be buyers from the rental sector but this policy in isolation isn’t enough to solve the housing problem. There is still a huge supply and demand imbalance in the rental market and this needs to be addressed. Boosting house-building in one part is the answer but the Chancellor has missed a golden opportunity to unlock accommodation sat idle across the country.”

Landlords with unoccupied property were not mentioned in the Budget announcement, however many local councils have already called for landlords to try and reduce void periods as much as possible and not rely on landlord insurance policies or unoccupied property insurance instead of finding tenants. Some members of the housing industry have been more positive about the Chancellor’s plans, yet still are concerned that it may not work out due to lack of enthusiasm, such as Donna Houguez, Market Analyst for Quick Move Now.

Ms Houguez said: “I think it is admirable that the Government is making this statement of support to the property market, and it clearly hopes that creating movement in this one sticky area will, in turn, stimulate the layers above. However, I am concerned that take up of past government schemes, from lenders, house builders and buyers alike, has been pitifully low and no rationale has been demonstrated to explain why ‘Help to Buy’ is likely to be any different.”

Home owners choosing to move into Rented Accommodation

A considerable amount of recent news stories have been commenting on how many people living in the UK are not able to get onto the property ladder and therefore have to rent private accommodation instead. The articles usually talk to tenants who complain that the amount it costs them to rent a property is too high, and that they would prefer to buy a property yet cannot afford to save for a mortgage deposit. However, it now seems that there are some people who are actually choosing to sell their properties and move into private rented accommodation instead.

For example, one woman named Stephanie Betts recently decided to sell her home in Fulham and move to a rental property nearby so she could invest the extra money into her business. She said her husband Martin was initially unsure of the idea, especially as he “used to work in property so he was very keen on home ownership, whereas to me it’s about allocation of resources.” Ms Betts goes on to say that she has actually found that privately renting a property has meant that she gets more for her money and that she now has more options when it comes to what type of property she wants to live in.

Her family currently lives in a privately rented house in Henley-on-Thames, but are planning on moving to an even bigger property which costs around £2,500 a month. In comparison, properties in the area cost around one million pounds to buy, which would require a deposit of £250,000 – a price that is simply out of reach for the family. Ms Betts said: “I have noticed a real change in attitude. Friends used to be down on renting, but they are beginning to see the flexibility. No stamp duty, hardly any fees and sometimes more choice.”

Another benefit of living in a private rented accommodation is that it is the landlord’s responsibility to keep the property maintained, and as the costs are usually covered by landlords insurance it’s generally a win-win situation for both tenants and landlords. Some people are still wary however as many landlords only offer short-hold tenancies, but Geo Theo, who has rented a flat in London for the past ten years, said: “I have a great relationship with my landlord, so I’m pretty sure they wouldn’t kick me out with two months’ notice. I looked at buying again but it just doesn’t seem worth it for the expense and hassle.”

Government urged to build more Affordable Housing

We have all seen in the news that there is a lack of affordable housing in the UK right now, which is why the government have been called upon to find new ways to increase the amount of new builds. However, it has now been revealed that in 2012 the number of housing starts actually dropped by eleven per cent, and now many organisations are becoming worried that the housing crisis will only get worse in the near future.

Figures from the Department for Communities and Local Government (DCLG) also revealed that since its peak in 2006, the number of new houses being built has fallen dramatically from 183,000 per year to 98,280 in 2012. The housing charity Shelter has shown concern over the lack of new affordable houses being built, with chief executive Campbell Robb saying: “Unless action is taken now, it’s hard to see our housing crisis improving any time soon.”

However, the government have defended themselves, with a spokesman from DCLG saying: “The government is far from complacent, which is why, despite the need to tackle the deficit, we’re investing £19.5bn public and private funding in an affordable housing programme set to deliver 170,000 homes, putting £1.3bn into unlocking stalled sites and building the infrastructure we need and making enough formerly used, surplus public sector land available to deliver 33,000 new homes.”

The Home Builders Federation have also defended the decrease in new builds by claiming that building new homes is difficult due to the challenging economic environment, and stated that: “A lack of mortgage finance is the most important short-term issue and if buyers can’t buy, builders can’t build. But we have seen a much more positive start to the new year with an easing in lending and schemes like the government’s NewBuy enabling people to get a 95% mortgage.”

Even though it may be difficult for buyers to secure a mortgage for a new property, many buy-to-let landlords are finding that banks are making it easier for them to take out loans for new properties. Even though the housing market is still a bit risky, landlords who invest in properties are very likely to find tenants quickly as there is a huge demand for private rented accommodation, and if landlords protect themselves with landlord insurance they could find increasing their portfolio extremely profitable.

Rent Prices have Dropped for the Third Month in a Row

There has been an increasing sense of uneasiness from the British public recently as rent prices have been set to increase, which means that tenants are concerned that they may have to cut back in order to pay their rent, whilst landlords feel that there is an increased risk that their tenants will fall into rental arrears. Whilst many landlords have invested in comprehensive landlord insurance policies to protect themselves against any problems they may encounter in the future, a stable market would help matters even more.

This is why it is good news that is has been reported today that rent prices have actually decreased for the third month in a row, meaning that many landlords and tenants of private rented housing can breathe a bit easier. According to LSL Property Services, who owns chains Your Move and Reeds Rains, rent prices have fell 0.3 per cent month on month so now they are £732 on average, which is the lowest amount seen since July last year.

Rent figures may have decreased due to the fact that there has been an increase in first time buyers on the housing market, meaning that demand for private rented housing has actually decreased somewhat. Discussing the figures, LSL Property Services director David Newnes said: “An improving mortgage market in January helped take a little pressure off the limited supply of rental property, at a time when demand from tenants on the move is far from its seasonal peaks.”

“But the dip in competition is not likely to last long. The pace of the fall in monthly rents has slowed, and we are already seeing tenant activity pick up. The private rented sector is coiled for a spring bounce.” The figures from the study went on to show that the South East had the biggest decrease in rent prices at 1.5 per cent, whilst in London rents have also gone down to 0.2 per cent, however they are still 5.2 per cent higher than a year ago.

It will be interesting to see what will happen in the private rented sector in the next few months, as it seems that even the best predictions can sometimes end up wrong. Seeing as the home ownership figures are intrinsically linked to rent prices, whatever happens in one sector will sure to have a huge effect on the other.

UK Housing Market may be Improving

Yesterday we reported how it is currently taking young people an average of ten years to save up for a deposit in order to buy their own property, and up to twenty four years for those that want to move into London. However, now there have been reports that the UK housing market may actually be improving, as the Council of Mortgage Lenders (CML) have said that the amount of first time buyers has actually increased in the last year.

At the same time, the Office for National Statistics has also reported that the housing market is improving, and that last year house prices increased by 3.3 per cent. Furthermore, the Royal Institution of Chartered Surveyors found that property sales have now increase for the fourth month in a row in January, meaning that all signs are pointing towards the worst of the housing market crisis to be coming to an end.

Discussing the statistics, Peter Bolton from the Royal Institution of Chartered Surveyors said: “It is interesting to see that the amount of completed transactions are on the rise, as confidence returns to the market place. While it is still very early days to talk about a comprehensive market recovery, activity levels are still encouraging and there is some optimism out there that things could continue to improve.”

“That said, in many parts of the UK – such as London and the South East – high house prices and the lofty deposits required by many lenders continue to prevent may first-time buyers from getting a foot on the ladder, which is preventing any significant movement at the lower end of the market.” Private rented sector landlords could use this new information to their advantage, especially if they are planning on investing in more properties to add to their portfolios.

It is important for landlords to consider how the housing market could affect their business, especially if there is soon less demand for private rented accommodation. It is important for landlords to invest in landlord insurance that includes an unoccupied property policy that can help with mortgage payments should any houses in their portfolio become unoccupied for a substantial period of time.

Don’t blame the landlord

A tax expert and former landlord insurance policy holder says landlords should not be criticised for taking a commercial approach to their business just because tenants are finding their rents going up.

Mike Warburton has seen both sides of the landlord “coin” and says while there is little doubt that property owners with tenants are experiencing a boom period at the moment, it is not always like that, explaining “It’s not much fun being called on a Saturday evening by your tenant to be told that the washing machine has stopped working or that they have managed to lock themselves out.”

He believes that the lack of funding available for young people hoping to get a mortgage has forced many people into becoming tenants against their will but insists that is not the fault of landlords. It is a misconception to assume most landlords are professional property owners with dozens of houses in their portfolio. The majority of landlords own just 1 or 2 properties and it is more and more tending to be people who can find no decent place for their savings or pension plans because of the low interest rates offered by banks and the uncertainty of stock markets across the world.

He explained: “These small landlords are just looking for a decent return on their money and their capital protected from inflation. The property market is a good example of supply and demand at work. Demand is increasing and not enough houses are being built. In these circumstances, it shouldn’t surprise any of us that rents are going up. I realise that some landlords have not looked after their properties as they should have done and may have given the industry a bad name. The majority, however, are diligent and have taken on board the various regulatory changes with stoicism.”