Just a few weeks ago PropertyQuoteDirect reported on the Bank of England’s new criteria for personal mortgages. At the time, those that work in the private rental sector were unsure of whether the Bank would also bring in harsher regulations for buy-to-let mortgages, and recently they have admitted that they have been considering it. However, even though the Bank of England have stated that they are looking into changing lending criteria for buy to let mortgages, they have no official plans as of yet.
The Bank’s Financial Policy Committee (FPC) stated that if there was another housing bubble both homeowners and landlords would suffer, which could increase homelessness in the UK. This is why the FPC want to protect both markets in order to ensure that when interest rates rise neither will go back to the same states as they were during the recession. A spokesman for the FPC added: “The FPC considered the need to monitor mortgage lending activity beyond the scope of the recommendation to ensure that financial stability risks did not shift to other lending institutions or forms of lending. Continue reading
As house prices have continued to rise the Bank of England have been put under pressure to increase their interest rates in order to avoid another housing bubble. However, the Bank claimed that they were wary of doing this as a large percentage of the UK population are still struggling with the cost of living which means that if interest rates were increased households could start defaulting on their mortgage repayments. This is why the Bank of England’s Financial Policy Committee (FPC) met up this week in order to come up with a way to stem the housing bubble without negatively affecting the UK economy.
As a result, the FPC decided that instead of increasing interest rates they would instead stem the amount of mortgage approvals by only allowing lenders to offer mortgages 4.5 times the amount of a household’s income. Previously, business secretary Vince Cable suggested that the cap should be 3.5 times a household’s income, however the Bank of England governor Mark Carney dismissed this suggestion as he believed it would leave too many people unable to purchase properties. He added that a limit of 3.5 times a household’s income “would have been more consistent with a period of higher interest rates.” Continue reading
There have been concerns recently that the property market is unstable and that even though the UK is currently recovering from the recession if the government doesn’t do something soon we may see another market crash. To make matters worse, not all parts of the UK are seeing the same rise in property prices as others, meaning that it is becoming difficult to afford properties in London and the south east while markets in other areas of the country are still struggling.
However, we are also seeing conflicting news reports concerning the housing market, as while some believe that it will continue to inflate until it hits breaking point, others are claiming that it is already cooling down. For example, the Royal Institution of Chartered Surveyors (RICS) has recently published data which shows that the property market is starting to stabilise. They claim that since February 2013 the number of new inquiries from house hunters has fallen to a much slower pace and that the number of homes going on the market has decreased for the past five months in a row. Continue reading
Over the past few months a number of property and economic experts have been vocalising their opinions on how the housing crisis can be solved. Currently, there is a much higher amount of demand for housing than there is supply, which has ultimately led to house prices increasing at a rapid rate. One of the causes of this surge in demand is the government’s Help to Buy scheme which enables individuals to apply for a mortgage with a deposit of as little as five per cent.
In order to rectify the situation the government are funding a number of construction projects across the UK, however many are facing issues such as a lack of readily available building supplies and skilled labour. This is why many people were surprised to hear that the Help to Buy scheme is being extended until 2020, as even though it has brought activity to the property and private rental markets it’s ultimately unsustainable and could cause another housing bubble. Continue reading
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
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
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.
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.”
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.”
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.”