Tuesday 28 July 2015

Remortgage levels jump by a third in June

Remortgage levels soared by a third in June as homeowners looked to lock into low interest rates before borrowing costs start to rise, figures showed today.

The number of approvals for people remortgaging jumped to 23,985 during the month, the highest level since August 2011 and up from 18,137 in June last year, according to the British Bankers’ Association (BBA).

There was also a 6 per cent rise in pipeline loans for people buying a property, with 44,488 mortgages approved for house purchase.

The BBA said some of the year-on-year gain was due to the slowdown in the mortgage market seen in June last year, as lenders adapted to the tougher new affordability criteria introduced under the Mortgage Market Review.

But it added that once the impact of the change in the rules had been factored in, total mortgage approvals were still 8 per cent higher than they had been in the same month of 2014.

There was also a 4 per cent month-on-month increase in the number of loans approved for house purchase, in a further sign that the property market is picking up steam following the General Election.

Richard Woolhouse, chief economist at the BBA, said: “The housing market is beginning to hot up again, as we’ve seen a pick-up in the number of mortgage approvals for the last month.

“Interestingly, we’ve also seen an increase in the number of people remortgaging, which could be down to savvy borrowers taking advantage of competitive deals on fixed rate mortgages ahead of a possible rise in interest rates.”

Today’s figures predate a recent speech by Bank of England governor Mark Carney, in which he warned the official cost of borrowing could start to increase at the turn of the year.

He also suggested that over the medium term, the Bank Rate was likely to rise to around 2.25 per cent.

Total mortgage advances reached £11.6bn in June, up on both £10.7bn in May and the £10.2bn lent in June last year, the BBA figures showed.

Net lending, which strips out repayments and people switching to a new deal, reached £1.2bn, unchanged from May but significantly higher than the £811m seen in June last year.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “The latest statistics from the BBA showing that mortgage approvals are on the rise is great news for the market and borrowers alike.

“This rise is partly fuelled by record-low mortgage deals: the average two-year fixed rate mortgage has fallen from 3.67 per cent a year ago to 2.75 per cent today, and borrowers are clearly taking advantage of these low rates to secure lower monthly repayments.

“However, with Mark Carney’s announcement that Bank Rate is likely to rise in the near future, these low rates will not be around for long.”

Friday 24 July 2015

The era of cheap mortgages is set to come to an end

Interest rates could rise within months ending the era of cheap mortgages, the Governor of the Bank of England has warned.

Mark Carney told households to prepare themselves for a hike in the cost of borrowing at around the turn of this year.

He warned in a speech given at Lincoln Cathedral that with the economy recovering, wages rising and high numbers of people in employment, interest rates would have to rise to help control inflation.
He said: “The need for Bank Rate to rise reflects the momentum in the economy.

“It would not seem unreasonable to me to expect that once normalisation begins, interest rate increases would proceed slowly and to a level in the medium term that is perhaps about half as high as historical averages.

“In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year.”

Carney said the historical long-term average of the Bank Rate was 4.5 per cent, suggesting the official cost of borrowing could be increased to 2.25 per cent.

But he added that shocks to the economy could easily affect the timing and speed of any interest rate rises.

Interest rates have been at a record low of 0.5 per cent since March 2009.

A 0.25 per cent increase in the cost of borrowing would increase repayments on a variable rate £150,000 mortgage by around £17 a month or £204 a year.

If the Bank Rate continues to increase to 2.25 per cent, households with a £150,000 mortgage would have to find an addition £126 a month or £1,512 a year.

Any increase in mortgage rates is likely to lead to a slowdown in activity in the housing market.

Strong house price rises in the past couple of years have led to affordability becoming stretched, with the typical property currently costing 5.25 times average earnings, the highest level since April 2008, according to mortgage lender Halifax.

There will also be concerns about the ability of some households to keep up with their mortgage repayments, although previous research has suggested consumers are prepared to cut back on other spending and even take on second jobs in order to keep up with their home loan.

Even so, Carney warned that if interest rates rise in line with current expectations by financial markets, half of homeowners with a mortgage would face higher repayments in a year’s time and three-quarters would see a hike in two years’ time.

But on a brighter note, he reassured borrowers that the Bank of England’s Monetary Policy Committee would “proceed slowly”, and that it would adopt a “feel its way as it goes” approach to increasing the Bank Rate.

Thursday 16 July 2015

A new law for landlords and lettings agents.

Rent Smart Wales aims to raise standards in the private rented sector in Wales with the introduction of a new  law requiring the registration and licensing of landlords and agents.
The countdown to the new legislation coming into force has begun. It is intended that the legislation will result in:
  • improved standards of letting and management practice in the private rented sector
  • more information on landlords available for tenant verification and for local authorities to assist with strategic intervention and dissemination of information
  • raised awareness by landlords and agents of their respective rights and responsibilities
  • in turn, raised awareness by tenants of their respective rights and responsibilities.
From autumn 2015, landlords and agents must become registered and licensed via Rent Smart Wales. This will mean that:
  • all private landlords who have a rental property in Wales must register themselves and the addresses of their rental properties in Wales
  • landlords who undertake defined letting or property management activities at a rental property in Wales must apply for a licence. If a landlord instructs an agent to do such work on their behalf, it is that agent who must become licensed
  • in order to get a licence a person must be adequately trained, and also declare themselves ‘fit and proper’
  • licensing training will be offered through Rent Smart Wales or people can choose to attend Rent Smart Wales approved training courses delivered by other bodies.
Powers are being given to the licensing authority from autumn 2015 to administer the new legal system and register landlords and grant licences. After the initial year of operation, in autumn 2016, the range of enforcement powers in the Housing (Wales) Act 2014 (such as fixed penalty notices and prosecutions) will be introduced and landlords and agents found to be ignoring their new obligations will have action taken against them by local authorities and the licensing authority. This will give people a year to comply without fear of legal action.

The new legislation and Rent Smart Wales will replace the existing voluntary Landlord Accreditation Wales scheme, which has been operated by Cardiff Council on behalf of all local authorities in Wales. 

YOUR AGENT Comment:

There will be no need for any of our Landlord clients to undergo this licencing, training or accreditation process. YOUR AGENT will be licenced and accredited on their behalf. 

If you are a landlord who does not want to go through this onerous process then why not let YOUR AGENT be your agent? And let us take the hassle out of managing your property.


Wednesday 15 July 2015

UK landlords seeing rise in tenant demand.

Almost half of landlords in the UK are reporting an increased demand for rental properties which is expected to continue over the next 12 months.
 
Some 43% have experienced a rise in tenant demand and it is being driven by young people and families, according to the latest research by specialist buy to let lender Paragon Mortgages.

It also shows that 51% expect this level of growth to continue over the next 12 months with 47% renting to young couples, 43% to young singles and 42% to families with children.

"It is no surprise that rental demand is steadily increasing. With continued stress on the housing stock driving prices up, tough affordability hurdles for would be buyers and a social rented sector under pressure as a result of renewed interest in right to buy, a steady increase in rental demand was practically inevitable,’ said John Heron, Managing Director of Paragon Mortgages.

‘It is important that landlords continue to expand the supply of rented property in order to maintain balance and so avoid unsustainable increases in rents. A healthy, competitive and innovative buy to let market is critical to this,’ he added.

Here at YOUR AGENT we currently have a 99% occupancy rate. With demand outstripping supply.So if your a landlord with emprty properties across Swansea, Neath, Port Talbot & Bridgend give us a call.

Tuesday 14 July 2015

Neath named one of top 10 cheapest places to buy property in the UK

Neath has been named one of the top ten cheapest places to buy property in the UK, following research by Halifax.

In an analysis of price by square metre in 331 British towns, the bank found that Neath was the eighth cheapest place to buy property, at £1,022 per sqm.

 Aberdare topped the list at just £910 per square metre, joined by Merthyr in third place at £967. Scottish town Wishaw came in second place at £926. The rest of the list is made up with three other Scottish towns - Airdrie, Greenock and Coatbridge - along with Accrington and Blackpool in Lancashire and Scunthorpe, Yorkshire.

Halifax's director Craig McKinlay said: "House price per square metre is a useful measure for house price comparison because it helps to adjust for differences in the size and type of properties between locations."

Across Wales, property prices per square metre were found to average £1,2777, while England came in at £2,033, and Scotland £1,490.

Monday 13 July 2015

George Osborne confirms Inheritance Tax savings

Couples will be eligible for an additional £350,000 Inheritance Tax relief after George Osborne confirmed plans to scrap the levy on family homes worth up to £1m in the Emergency Budget.

Osborne announced today that he will raise the Inheritance Tax threshold from £325,000 per person to £500,000 in his first wholly Conservative Budget since 1996.

It means that a couple will be able to pass on assets worth up to £1m, including a family home, to their children and grandchildren without paying any Inheritance Tax after April 2017.

Up to 953,498 more properties in England, Scotland and Wales are exempt from Inheritance Tax under Osborne’s proposals to raise threshold, according to Zoopla.

And Londoners are set to benefit the most from the proposal, with an extra 428,011 homes escaping the levy.

Under the current rules, a 40 per cent Inheritance Tax is charged on property and any other assets in an estate worth more than £325,000 for individuals and £650,000 for married couples and civil partners.

Osborne will now introduce a new £175,000 allowance for a family home when it is passed on to children or grandchildren from April 2017. It will be added to the existing threshold, where no Inheritance Tax is paid on the first £325,000 on the value of the estate. It will be fixed until the end of 2020 / 2021. 

The changes mean that individuals will be able to pass on assets, including property, worth up to £500,000 tax-free, while the total for a couple will be £1m.
Osborne also confirmed that downsizers will get the allowance up to the value of their previous home if they buy a cheaper property.

The relief will taper away for estates worth more than £2m.

Inheritance Tax was first introduced in 1986. The number of homes subjected to Inheritance Tax has increased alongside rising house prices. 

The Inheritance Tax changes were included in the Conservative Party’s manifesto in 2010 and earlier this year.

Osborne said: "The wish to pass something on to your children is about the most basic, human and natural aspiration there is. Inheritance Tax was designed to be paid by the very rich.

"Yet today there are more families pulled into the Inheritance Tax net than ever before – and the number is set to double over the next five years. It’s not fair and we will act."

The Chancellor added: "The result for families is this. You can pass up to £1m on to your children free of Inheritance Tax. No more Inheritance Tax on family homes. Aspiration supported. The tax paid only by the rich. The security of home ownership restored. Promise made – promise delivered."

Jeremy Blackburn, RICS head of policy, said: "Measures to reassure downsizing baby boomers that they will not be penalised through their Inheritance Tax allowance are welcome, but more could be done to unlock second hand stock now. One such reform might be to incentivise over 60s to downsize now by doubling their Inheritance Tax allowance on sale."

Friday 10 July 2015

Legionella – Landlords are responsible for checks

Did you know the law requires landlords to undertake an assessment on their residential properties to identify the risk of legionella.

What is legionella?

Legionella is a bacteria which lives in water systems like water tanks, air conditioning units and humidifiers. When breathed in, water droplets containing the bacteria can cause Legionnaires’ Disease.

What do landlords need to do?

Legislation states that landlords need to have a “competent person” undertake a risk assessment and identify if there are areas in which water could lie for long periods of time (the main risk factor for growth of the bacteria).

Landlords can undertake this assessment themselves if they believe they are competent to do so, or they can instruct a specialist contractor to do it for them.

What happens if a landlord fails to address this issue?

There are fines for landlords who don’t comply with the regulations. Legionnaires’ Disease can be fatal, and landlords have a legal obligation to ensure that their tenants and others visiting the property are protected.

Where can landlords get further advice?

The Health and Safety Executive has published guidance for landlords, which is available online at www.hse.gov.uk/legionnaires.

What does YOUR AGENT do?

We engaged a specialist contractor who can undertake legionella risk assessments at properties managed by us, on request from the landlord. We can organise this in the same way that other safety certificates, such as gas safety certificates. For more details, please call us on 08452 606 440 or email info@your-agent.co.uk

Wednesday 8 July 2015

Mortgage lending set to improve despite affordability concerns

Mortgage lending remained subdued in May but advances are expected to pick up going forward as activity in the housing market recovers, figures showed today.

A total of £16.8bn was advanced during the month, 3 per cent less than in May last year, and only slightly ahead of the £15.82bn lent in April, according to the Council of Mortgage Lenders

But the group said there were signs that a modest recovery was underway.

It said once seasonal factors were taken into account, lending would have been above £17bn, making it the third consecutive month that seasonally adjusted advances would have been above this threshold, the first time this has happened since the start of 2014.

The group also pointed out that forward indicators, such as mortgage approvals, suggested the market was heading for an upturn in lending over the coming months.

The number of loans in the pipeline for house purchase increased by 10 per cent in April compared with March, the biggest monthly jump since early 2009.

Mortgage approvals for people remortgaging were also up by 10 per cent, as homeowners looked to take advantage of the very competitive interest rates that are currently on offer.

Meanwhile, unemployment is continuing to fall, wages are rising and interest rates look set to remain at their current record low until next year.

Mohammad Jamei, CML economist, said: “The economic environment is one that should support increased activity in the near term, coupled with low mortgage rates.

“But while we expect these factors to support activity, there is a limited upside, driven mainly by affordability constraints.”

Strong house price growth has pushed up the average cost of a UK property to £266,187, according to Zoopla.

Meanwhile, data from mortgage lender Halifax shows that the house price to earnings ratio increased to 5.16 in May, the highest level since May 2008.